Intermediaries say good organisation is the best way to stop remortgagors going direct, after news that not all big lenders direct customers back to their original broker.
Most lenders write to customers ahead of their term’s end to tell them to take action. However, only six of the top 10 lenders signpost back to the introducing broker in these communications, according to Mortgage Strategy research.
Barclays, Coventry Building Society, Lloyds, Santander, TSB and Yorkshire BS all suggest customers contact their original broker. Virgin Money tells customers to contact an intermediary but does not mention the introducing broker.
HSBC, Nationwide and RBS do not mention brokers at all in their customer letters. However, HSBC rejoined the intermediary market only in October 2014 and says it will consider signposting back. Spokespeople for Nationwide and RBS say the lenders are also reviewing their positions on the issue.
London Money director Martin Stewart says: “It is naïve to think we own anything other than the advice process. Commercially, if I was a lender I would be doing exactly what they are doing. You can’t ringfence the client. It is up to the broker to maintain contact and hope they come back in the future, not assume they will.”
Hawke Financial Services mortgage and insurance consultant Gary McKenna says lenders that contact customers as their term ends are negating their increasingly broker-friendly approach.
He says: “Lenders spend substantial sums to educate brokers on products and pay for account managers to build relationships with those brokers, and then contradict this by approaching the client directly. They have a right to do so because, once the initial transaction completes, the client becomes the lender’s customer, but only a small number remember the initial introduction.”
So it is up to brokers to stay in contact with clients, McKenna adds. He says: “Any decent broker/brokerage will have a system in place to review any remortgages for their clients, so it’s almost driving a battle for who gets in there first.”
Lentune Mortgage Consultancy managing director Stuart Gregory says: “It would be polite for lenders to refer to the originating broker in correspondence but it’s a sign that they don’t truly ‘value brokers’ if they want to cut us out.”
Your Mortgage Decisions director Dominik Lipnicki says lenders have a financial incentive not to signpost back to brokers. “Few of them go back to the broker, and I suppose that’s to be expected as they can save the proc fee. But it’s a very short-term view because the advisers are the ones who got them there in the first place.”
There is no regulatory requirement for lenders to contact customers before their mortgage term ends unless interest rates change.