Thomas Reeh, chief executive of the brokerage, criticised two-year discount products in particular for providing headline rates, but little long-term value for customers. He said too many customers reverted to standard variable rates (SVR) at the deal’s end and that lenders and brokers had a duty to work more closely to prevent this.
He said: “We need to make sure customers are not disadvantaged in the long-term by two-year discounts, because otherwise we will run headlong into TCF. Lenders rely on customers not to switch deals, so how is that TCF when there are better deals out there? The bigger issue is that lenders won’t share information on customers, which brokers rely on. It’s a big downside from a TCF point of view.”
But Andy Frankish, managing director of Mortgage Talk, said it was intermediaries who have the duty to go back to the client. “Brokers should have robust processes in place of telling when the client is coming to the end of the deal. We have to look at ourselves and how we service clients. If we’re not explaining to the client what will happen at the end of the deal, we’re not treating them fairly. It all comes down to best advice.”
Tony Jones, managing director for Pink Home Loans, commented: “It’s very unusual for customers to stay on SVRs, as they are much more savvy and sophisticated now and intermediaries are using diary systems to know when a deal matures. In days gone by, a customer would have lost out, but not now. I think the onus is on the mortgage intermediary to go back to clients. A good broker proactively does, not just at the end of the deal, but before.”
