Phil Alvey, principal at Derbyshire-based Redwood Financial Management, said several of his clients had been offered the cash incentive if they remortgaged with another lender using London & Country.
“I think it’s quite unethical,” he said. “The whole industry relies on the relationships we build up with clients and those details we pass onto the lender shouldn’t be passed on to other brokers without our knowledge.”
David Hollingworth, communications director at London & Country, said the offer is a pilot scheme the lender is doing with L&C to see how borrowers react to a cash incentive.
He said: “I can’t comment on Bank of Ireland’s decision to run this pilot with us as it is existing clients in their back book they are referring to us.
“The aim of the pilot is to try to understand how customers will react to this cash incentive. It’s no secret that Bank of Ireland has been trying to deleverage for two years or more so this isn’t about remortgage business.”
It is the latest in a series of efforts Bank of Ireland has made to encourage borrowers in its back book to remortgage with another lender.
Others have included waiving early repayment charges to entice borrowers to move away as long ago as 2009.
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.”
The deal is restricted to selected borrowers at the moment but has been going on for under two months. Bank of Ireland was unavailable to confirm whether it was on offer exclusively via London & Country.
In its half year results statement released this morning, Bank of Ireland said it holds £27bn of UK residential mortgages, 2% less than six months ago after running down its UK intermediary book.
Richie Bouchers, Bank of Ireland chief executive, said: “Our ‘run-down’ intermediary mortgage book [is]down 4% for the period and 17% since it was placed into run-down in January ’09.
“Some negative equity remains in our portfolio amounting to circa £146m at June ’11.”
The bank also said arrears in the overall UK mortgage book have stabilised, with arrears greater than 90 days at 196 bps at June 2011 compared to 199bps at Dec 2010.
Bouchers added: “The annualised impairment charge in the UK mortgage book continues to trend downwards with a 12bps charge in H1 2011, compared to 17 bps in H2 2010, and 21 bps in H1 2010.”
Bank of Ireland is attempting to sell loan portfolios including Project Finance, Burdale, US Commercial Real Estate, a portion of its UK Commercial Real Estate Books and some of its UK Mortgage portfolios.
It said: “These processes are well underway and are progressing broadly in accordance with our expectations. Loan redemptions, repayments and refinancings in our non-core portfolios in rundown are also in line with expectations.”
