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When is it OK to pull deals?

Last week Mortgage Strategy revealed that Future Mortgages was suspending its 100% LTV product range.

Its excuse was that overwhelming demand for the product meant service was unable to keep pace.

But prior to this, Future had denied for a number of weeks that there was a problem with its service, despite there being a number of complaints from both brokers and packagers.

The company says it will honour all business in its pipeline and expects to relaunch the product in 2006, but many expected more from the company when it relaunched in April.

So, this week Mortgage Strategy asks: “Is the suspension of products due to poor service ever acceptable?”

Dev Malle, Pink Home Loans
What’s happened here is that Future’s volumes have peaked quicker than the company wanted. While it is right to protect the service it delivers to brokers it must also understand that intermediaries are not like a tap that can be turned on and off. Brokers will remember a lender for some time to come if they suffer a bad service experience with it.

Matt Grayson, BM Solutions Every situation is different. A lender in a difficult service situation is primarily judged on the speed with which it reacts and the open and honest way it communicates with the market. Brokers are realistic enough to know that problems can occur, whether they are big or small. They want the comfort of knowing the lender is throwing the kitchen sink at the problem and is committed to sorting it out in the interests of all concerned.

Bob Young, Capital Home Loans Definitely not. It would not be treating customers fairly to restrict access to a popular product in these circumstances. The result of withdrawing a product is that a customer could end up with a less suitable mortgage, possibly priced higher. By doing this, a lender would also be letting down the intermediary sector because quite often a broker will have already informed their customer about a product many weeks before the application process starts. Intermediaries need to have confidence in the consistent supply of products – they can’t be there one moment and gone the next.

David Hollingworth, London & Country
Future’s decision to temporarily suspend new business on its 100% mortgage products strikes me as sensible. A competitive product means huge volumes of interest and stress on service levels. It happens all the time. There’s no point in lenders putting out market-leading products if they can’t cope with demand but in this case Future has accepted there is a problem and made moves to fix it.

Mehrdad Yousefi, Alliance & Leicester
It is good to see lenders and brokers communicating openly. There should be a degree of tolerance toward those companies that admit they are suffering from difficulties and are trying to rectify the situation rather than offering a level of service that is not up to their usual standards. Our market is such that sometimes lenders and brokers have to react to the dynamics of supply and demand. By taking an honest stance they can keep lines of communication open which can help when it comes to managing relationships and expectations.

Linda Will, Accord Mortgages
It’s fairer to customers to suspend products because of poor service than to offer them without being able to deliver effectively. Soldiering on under false pretences can damage reputations and relationships. Brokers aren’t daft and they have respect for lenders who are open and explain the situation. I can’t comment on Future’s distribution model but we anticipate business levels for each product, which allows us to manage inflow and monitor intake.


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