Advisers call for borrowers to be referred back to them as fixed terms end
More lenders should refer borrowers back to brokers when the end of their fixed terms approach, urge mortgage advisers, with some lenders accused of trying to ‘edge out’ brokers for financial gain.
It comes as Principality Building Society reports that it is bucking remortgage trends, with a year-on-year improvement in the percentage of business volume and value it retains - up 6% since 2022. In part, Principality attributes this success to its policy of referring borrowers back to the brokers who set up their original deals, three and six months ahead of fixed-terms ending.
“Principality are to be applauded for referring customers back to their brokers,” said Gregor McMeechan (pictured left), managing director of Malleny Mortgage Solutions in Edinburgh. “Over 80% of all mortgages are arranged via brokers but some lenders are trying to edge out the brokers by not referring customers back to their broker or not mentioning their broker in their communications, nor mentioning any broker. They are doing this for profit rather than customers’ best interests, as they get to retain the customer at low cost.”
McMeechan suggested those acting in this way were going against regulation introduced to ensure they were operating in the best interests of clients. “If you relate this to Consumer Duty then lenders should not be allowing direct product transfers as there has been no advice given,” he said. “The advice given is key to making the right decisions for customers. Atom Bank are to be congratulated as that’s the way they operate - they have a list of brokers on their website that people can use. Other lenders should follow this example.”
Kasia Makarewicz (pictured second from left), senior mortgage and protection adviser at Step by Step Financial Solutions, describes this as a controversial issue within the industry. “I strongly believe lenders should be doing much more to refer clients back to their original brokers,” Makarewicz told Mortgage Introducer. “It makes a real difference to the outcome for the client, and ultimately reflects a higher standard of care in our industry. As advisers, we've already taken the time to build a strong rapport with the client and understand their unique circumstances. This means we’re best placed to reassess their current needs, verify all relevant documents and provide tailored advice accordingly.” She continued: “Importantly, we can also compare deals across multiple lenders, something lenders themselves simply cannot do. Especially in today’s climate, where the cost of living has increased significantly, it’s not responsible to restrict clients to just one lender's offering. Are we really treating the customer fairly if we’re limiting their options? Lenders often don’t have the time to speak in depth with clients and certainly not with the same level of attention and understanding an adviser can provide. Some lenders are even introducing dual pricing, which only adds to the risk of clients missing out on better, more suitable deals elsewhere.”
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Recognising the broker share of the market
Principality Building Society says it wants to recognise the growth in brokers’ share of the product transfer market and maintain the link between its borrowers and their mortgage brokers. “We’re keen to engage our registered brokers with our product transfer ranges and make sure they are the first to know our latest deals,” said Helen Lewis, national account manager for Principality Intermediaries. “We know it’s important that they retain their relationship with our customers to get the best mortgage for them, which is why we encourage our customers to contact them. We’re delighted with our outcomes.”
Broker Serena Smith (pictured centre), at Mortgages with Serena, welcomes Principality’s policy and suggests that lenders should respect how they won the business originally. “It is fantastic when lenders do this as we are the reason they go the business in the first place,” Smith commented. “It's a bitter shame when lenders do try to cut us out following our due diligence & expertise in securing them the client.”
According to broker Sam Mason (pictured second from right), at The Mortgage & Protection Hub, it makes a real difference when lenders actively refer clients back to their original broker - or at least highlight this as an option. “We’re often the ones who’ve built the relationship from day one, understood their full circumstances, and guided them through what’s usually a pretty stressful process,” Mason said. “Unfortunately, that handover back to the broker doesn’t happen as often as it should. When it’s missed, not only can the client miss out on tailored advice, but it also feels like brokers are being sidelined after doing all the groundwork.” He added: “Having said that, we as brokers really need to take responsibility & be proactive on this rather than relying on lenders to send customers back to us. We need to contact customers at least six months ahead to ensure they've got the best chance of securing a good deal - something we are all over at The Mortgage & Protection Hub.”
Meanwhile, Alison Dearman (pictured right), mortgage and protection adviser at Chris Law Mortgages, shares that her firm proactively contacts clients six months before their deal ends to review their situation, but notes that few remain with their lenders. “Of the customers I’ve seen, who have a deal ending, only a small percentage have stayed with their existing provider,” Dearman said. “In many cases, other lenders are offering better rates to attract new business, so it’s been in their interest to remortgage elsewhere.”
