Do limited lender panels mean limited advice?

Research showing intermediaries do 58% of their business through just three lenders sparked concern in the industry last week.

The findings from Charterhouse Research also showed that brokers are placing business through an average of just 11 lenders, which has caused some to question whether intermediaries are offering the best possible advice to their clients.

Ray Boulger, senior technical manager at John Charcol, says: “These findings suggest a lot of brokers are not giving as good advice as they should be. There are many intermediaries out there who deal with all lenders but equally there are an awful lot who have small panels.”

The Financial Services Authority will not comment on the findings but stresses that under its rules, a broker should always recommend the product that is most suitable for the client.

So, Mortgage Strategy asks: “Do you think brokers are offering best advice if they are only dealing with an average of 11 lenders?”
Kevin McRobie, Skipton – In an ideal world, every broker would look at products from every lender every time to make sure the client was getting the best deal to meet their requirements. However in the real world it has to be accepted this is not feasible. A good broker will ask the right questions and then use not only their product knowledge but also personal experience of lenders’ application processing times, service levels and lending criteria to make a recommendation.

James Cotton, London & Country – Brokers should always be looking at providing the best is right for the customer. It might be that a handful of lenders are the ones that represent the best deal for customers. Some brokers work from a restricted panel, which means their options are limited. L&C used 70 lenders last year.

Neil Franklin, Franklin’s Financial Services – Some lenders can offer competitive deals through their fixed and variable rates, and to a certain degree have a good relationship with a broker. Some of the smaller firms do not feature on the trading exchange and brokers feel more comfortable dealing with the larger companies’ systems.

Martin Reynolds, BM Solutions – I believe we should have faith in brokers and not question their understanding and ability. In a competitive environment it is not uncommon that more than one lender can offer the best product fit for a client. So if nothing differentiates the products, factors such as service and speed can rightly have an influence on which lenders brokers use. It is at this stage that a using smaller number of lenders is likely to prove popular.

David Jervis, Norwich and Peterborough – I am surprised by these statistics and especially the percentage using only three lenders. At Norwich and Peterborough we deal with a huge number of intermediaries who like our excellent products and schemes, such as the new Lend a Hand mortgage designed to help first-time buyers.

Duncan Pownall, Bradford & Bingley – Best advice is not a case of one size fits all. Product selection is dictated by the type of clients you have. For those clients that require slightly different underwriting criteria, additional lenders will come into play. But price will more often than not be the main factor for a borrower.