Melanie Bien, director at Private Finance, said: “Brokers who have recommended that clients take out a deal with Bank of Ireland may now be regretting that decision.
“This is no level playing field: even if the broker gets a chance to talk to their client before the £1,000 cash incentive is offered, it will be very difficult to propose a better alternative.”
Matt Fleming-Duffy, a Bournemouth-based broker who quit Abacus Financial in May this year, was furious.
He said: “Straightaway, how is that treating customers fairly? Equally, as an industry standard that is pretty low. £1,000 is a heavy incentive forcing customers to use a particular broker. What would you do as a consumer? Say no to ready cash?
“It calls into question the whole transparency that lenders should adhere to and it doesn’t bode well for brokers if this type of thing goes on. For small brokers and IFAs client loyalty is their life-blood and this is more bad news.”
Andrew Montlake, director at Coreco, also questioned whether the deal was TCF compliant.
“Whilst London & Country are undoubtedly a fine, upstanding brokerage it does seem a little amiss to in effect restrict choice by pushing clients down one particular route,” he said.
“It does not really sit comfortably with treating customers fairly and whilst there is no issue with them suggesting a preferred broker, actually paying an incentive to do so is one step too far.”
Phil Alvey, principal at Derbyshire-based Redwood Financial Management, called the lender “untrustworthy” and warned Irish brokers against submitting new business.
“If Bank of Ireland has a total disregard for introducing brokers in the UK where they no longer lend, I’d question whether they might do this to Northern Irish brokers in the future,” he said.
“It smacks of this lender being totally untrustworthy. If clients want to go elsewhere then that’s fine but lenders shouldn’t be deliberately incentivising them.”
Yesterday Bank of Ireland confirmed it was running a pilot scheme with Bristol-based DA London & Country to try and entice a select group of back book borrowers to remortgage with another lender by offering them a cash incentive of £1,000.
The lender has since admitted the incentive is only payable to borrowers remortgaging through London & Country, meaning that if that borrower wishes to go back to their original adviser they must forgo the cash.
Bank of Ireland did say it would waive borrowers’ early repayment charges if they chose to remortgage with their originating broker.
A statement from the lender said: “Customers who decide to switch their mortgage from Bank of Ireland to another lender through London and Country will receive £1,000 and their Early Repayment Charges waived.
“Within all customer correspondence we confirm that the customer may wish to speak to another mortgage broker or originating broker.
“Bank of Ireland UK is committed to ensuring that our existing customers receive excellent service and that all decisions made impacting our customers have been made on a fair and consistent basis.”
Yesterday Robert Sinclair, director of the Association of Mortgage Intermediaries, said: “Given the current difficulties encountered by a number of lenders which used to be in the mortgage market, it’s possible we’ll see more of these schemes trialled.
“AMI would ask that any lenders considering this approach first of all offer this opportunity to the broker who introduced the deal before packaging up and using a single other broker.”
However not all brokers were up in arms.
Chris Gardner, director at Obligo, said he could understand the practicality of restricting distribution of the pilot to London & Country.
But he admitted it was symptomatic of unfairness in the market.
“I don’t see that this is any different from dual pricing or exclusive access to products,” he said. “There is clearly a precedent in the market for unfair distribution.”
