It was with some pleasure that I picked up last week’s issue of Mortgage Strategy to see two besuited individuals slugging it out on the front cover (August 21).Ever since it was briefly touched upon at the Mortgage Summit in Jerez, the issue of client ownership has been ripe for a good airing in this magazine. It took a bit longer than I thought it would but when it came the content of the cover story did not disappoint. As one esteemed mortgage professional points out in the article, “Intermediaries have relationships with clients that lenders do not – and they are the ones giving advice”. That seems as good as any place to start. The client relationship is with the broker and therefore the broker must have more right to the client than the lender. But whether we as intermediaries can ever claim to have 100% right of ownership is the issue that really needs to be debated. The problem with exclusivity is that the argument only really stacks up if a broker can completely manage a client and their needs after a sale and, indeed, for much longer into the future. The argument that the client is solely the property of the adviser falters if proper client management is not in evidence. The problem is that most of us know this will not always happen. It would be simply fantastic to say all mortgage brokers are intently focussed on after-sales and developing relationships with their clients – in fact, it would be a lie. Of course, all this sits alongside the Financial Services Authority’s principles-based regulation and the regulator’s mantra of Treating Customers Fairly. Some people still seem to think TCF is just a smokescreen that can be used to win arguments when needed, but I disagree. TCF is here and we all need to apply its principles to the work we do. The only way to try and satisfy all parties in this argument is to compromise. Within the terms of an introductory mortgage offer there can be little question that the client is owned by the broker. Yet it is the responsibility of that broker to ensure they contact their client three months in advance of the expiry of their deal to rebroke them onto a new mortgage. If a broker does not do this the lender has a right to contact the customer. As I said in a piece about this just after we all returned from Jerez, the best brokers in this market are the ones who work from returning business. Chris Cummings, director-general of the Association of Mortgage Intermediaries, sums up the argument well in his comments in last week’s cover story. He talks about the client being morally owned by the broker as they find the client and place them with a particular lender. But he concedes that the client can’t be the sole property of the broker if that broker does not manage their customer correctly. As he succinctly puts it, “Clients will vote with their feet.” This will form the basis of the conclusion the industry will eventually reach, so is it just about defining the length of time after a deal has expired before contact is allowed? If only it were that simple.
While the emphasis must be on brokers to manage their clients properly, the issue of customer ownership will only be resolved with a compromise, says Drew Wotherspoon