Speaking at a panel held at Financial Services Expo Midlands, LSL Property Services director of Mortgages David Copland hailed 2018 as “the year of the product transfer.”
Copland added, however, that adviser’s margins could face a squeeze if intermediaries didn’t their share of product transfer business and if lenders continued to pay lower procuration fees.
He was critical of some lenders, and as well as saying that those in his sights should stop “bleating about margins,” commented that, “the proc fees are too low from some lenders, some of whom have come kicking and screaming into this market.
“There’s no reason why two-year deals can’t pay 35 basis points and five-year deals 50 basis points, which also leads on to why there can’t be trail commission paid for such products. A lot of work with product transfers has been done before they reach the lender, plus you’re carrying the risk of the advice as well.”
Simplybiz chief executive Martin Reynolds pitched in on the subject or narrower intermediary margins, saying that, “the procuration fee is a lot less.”
“This could be a fundamental shift for advisers and they need to look at the business and make sure they maintain their income. Clearly fees are not at the right level and need to be higher. To be fair, a few lenders have upped their fees this year and that comes from recognition of the work that needs to be done on such cases.”
MyHomeMove group sales director Dev Malles echoed Copland’s warning that brokers should keep their eyes on the ball when it comes to product transfers: “Brokers shouldn’t see this as a soft option, especially if consumers also begin to see this as a soft option.
“In two years’ time, consumers might look at their options and think that, because their adviser said they should stay with their existing lender last time, they should just go direct and do it themselves.”
Turning attention to the possible impact of Brexit, Coventry Building Society corporate relationship manager Johnathan Stinton said that there was a lot of fear around the UK’s exit from the EU.
“We’ve already seen an impact in terms of a reduction in purchase activity although I expect remortgaging and product transfers to play a bigger part in the market,” he added.
