Pay us for our time on remortgages

 

Autumn’s nearly here and we’re all getting back to work with a vengeance, figuring out where the next piece of mortgage business is going to come from.

As a regional IFA, all our business comes from existing clients or referrals, which as we all know is the most straightforward way to obtain business. In the past five years about 50% of our mortgage work has been for remortgage clients. Most people come back to us each time their scheme is due for review. This is gratifying and it’s nice to catch up with them.

I know the Financial Services Authority regards the relationship between mortgage adviser and client as transient but we do not and nor do our clients. But despite the fact we arranged a mortgage in the first place, we regularly encounter difficulties with lenders when it comes to review time in that they are unwilling to speak to us, the advisers, about an existing mortgage – sometimes even when we have written client authority.

I understand and respect the problems of data protection but I cannot fathom why we cannot get generic information from most of them about rate options for existing borrowers. This should not be specific to each client and should be openly and readily available. But I now have to ask clients to get this information for me which can be problematical as they don’t necessarily ask all the right questions. After all, that’s why I’m here to help them.

In the past year or so I’ve noticed a trend among lenders. Let’s call it the ‘we’d better start hanging on to our existing clients’ theory. It’s a new idea for them but not for brokers. It seems they have finally realised clients will walk away if the deal they are offered is not competitive enough. Suddenly the schemes being offered to these clients, while often not being cracking market leaders, have become much more attractive. Staying with your existing lender is always preferable as you don’t have to go through tedious underwriting and possible extra costs.

That’s why our clients come back to ask us what to do. They know we’ll give them an honest appraisal of the deal they’re being offered and compare it with what else is on the market. Frequently I find myself advising clients to stay with their existing lender. This still takes up plenty of time, doing the research and the maths. We could charge a flat fee to clients for this service but this is uncomfortable when the final conclusion is to stay where they are but switch rates.

So why don’t lenders pay us a nominal fee for giving such advice? We have to obtain a Key Facts Illustration so it should be easy to prove our involvement. Or the client could sign something on the switch paperwork. We could call it a retention fee or a renewal fee, perhaps. Or maybe we ought to look again at a form of trail commission. I’m sure the cost to lenders would be worth it and it would make life easier for them, us and most importantly our clients.

Sue Read is a consultant, Marshall James & Co