FTAdviser.com

If I have learnt one thing from working on Financial Adviser, Investment Adviser and now editing Mortgage Adviser it is this - Advisers have long memories.

In the last few weeks we have been inundated with emails from intermediaries moaning about lenders putting out direct to consumer deals that under cut their intermediary ranges.

Halifax, Woolwich, Nationwide and Abbey were accused on widening the gap between direct to client and intermediary products. All lenders said the move had been about controlling levels of business, they had been forced into it by the market and it was not intended to upset advisers.

Advisers are an understanding bunch. I know many appreciate the work being done by Abbey, which last week brought back mortgage exclusives for intermediaries, and the other three lenders who incurred their wrath this week.

They know how tough the market is at the moment and appreciate some things will occur that hurt them. However when the going gets good again - and it will eventually - they will remember those who stuck by them.

The lenders must remember the old saying “what goes around comes around” The credit crunch has been over egged says the Bank of England. I am convinced that the increase in rates and arrangement fees is to increase the lenders margins

What a load of tosh the reason why lender are widening their own margins to the IFA is simply that they can control the flow of business and manage the amount they lend. They blame the IFA for their own greed all becaue their own highly paid executives trusted the Americans and purchased securitised loan books all becuase it was easy money. Quite simply the banks and the lender got greedy and had their fingers burnt. If I have learnt anything from being in this industry it’s time to get out when the Yanks come in because it’s usually a greed thing and the prospect of easy and a quick buck and our lends all got caught out by greed and an easy buck yet again

I have already spoken to a number of mortgage development managers who have indicated that the lenders are not overally concerned with intermediaries at the minute as they are making large profits on mortgage deals at present through rates and fees. They have also stated the lenders are trying to increase these margins further by offering their own in house protection policies. Which I know from reviewing a few of these especially Life & Critical illness policies are often inferior to the whole of market offerings.

Lenders can control business levels whilst offering equally priced products via all distribution channels.
Some Lenders have a history for being “committed to the Intermediary Market” yet always/regularly offering better products via direct channels so cannot blame their current strategy on the credit crisis.
Simple Solution: stop all exclusives/pricing differentials and use rates/fees to control volume. Then your BDMs might be welcomed whenever they start calling again.

Unfortunately the lenders will always hold the whip hand, they know that if they have a market leading product advisers are duty bound to use it. Otherwise it flies in the face of doing right by your clients. Don’t think the FSA will accept “we haven’t chosne the cheaper ‘A Lender’ product for you as they pissed me/brokers off with their antics in the credit crunch”

What disturbs me the most about all of this is not the fact that lenders are using the current market conditions to make extra profits and cut brokers out of the loop. After all, they are businesses and I would expect no better from them than to try and stifle competition in the long run by driving the broker market to the wall whilst filling their pockets in the short term. What bothers me most is the way in which all the major lenders seem to be acting in unison to achieve this.

So we now have outright profiteering going on. These lenders have openly admitted the fact that they are making millions/billions out of their own “self inflicted” credit crunch. Everyone is being hit by higher rates and astronomical fees. Advisers are being well and truly pissed on - and what are the FSA doing about it?

TCBLEEDINGF.

No further comment required I feel.

Hopefully this will last long enough to send the majority of Brokers to the wall. It will save FSA having to ban so many of them for forgery and theft. Then some new blood can deal with the resulting upturn. Creative Destuction, as the old phrase goes.

Why are we not shocked!! The providers for years have been acting in a god like selfish manner. They have always wanted the IFA to introduce business to them but when it comes to the servicing of that business/client they have always sought to remove you from the process.
At some point one of the lenders will break ranks and look to court the IFA again, shame we have never set up mortgage distribution/lending channels solely for the IFA.

Are the lenders forgetting so soon the words treating customers fairly? Offering seemingly low rate enticements to the unsuspecting public who will not be given the opportunity to received unbiased advice is not in keeping with the spirit of TCF. No doubt we IFAs and the Ombudsman will be being asked to sort things out in the future years to come!

I HAVE STATED FROM THE EARLY DAYS OF FSA CONTROLLING MORTGAGES - THAT THE MORTGAGE ADVISER WAS THE NEXT IN LINE FOR AN ATTACK OF MIS-SELLING - CAN WE REMEMBER THE ENDOWMENT SCANDAL? - NOT MIS-SELLING JUST A BAD PRODUCT AND THEN THE FSA GETTING INVOLVED ON HOW INSURANCE COMPANIES INVEST. BRACE YOUR SELF FOR BIG CLAIMS - THE COWBOYS HAVE MADE THE MONEY AND HAVE GONE INTO HIDING. THE HONEST ADVISER WILL BE AROUND ALWAYS PAYING THE SALARY OF THE FSA. PITY WE COULD NOT GO ON STRIKE.

They need to take on what RDR will do to their business. Only advice allowable is Whole Of Market. Whilst client will always come first, there will be times when lenders will see their rates so close and they will not get business.

They caused the credit crunch, receive hand outs from the Bank Of England to make more profit to give higher dividends. The Bank of England should insist they reduce their dividend rates before giving any bank any funds.

Lenders - we too have long memories. I look forward to the day when the credit crunch is history, the lending party starts again and they want their pound of flesh. I may look like an elephant but I’ve an elephant’s memory, too!

As an holistic financial planner I charge a fee for arranging a mortgage. I then credit my clients account with any procuration fee I may receive. I still do all the paperwork for the client so the work and income are the same. It is the client that is treated unfairly since they do not receive the benefit of the procuration fee from the lender. But isn’t it part of the FSA TCF drive to see that customers are treated fairly? Will they take action? Sounds too much like doing the job they are paid for to actually happen. Their argument that direct products being cheaper is a customer benefit that they want shows how little they think things through. So the customer has to give up work for a week to trawl around all the lenders to find out who has the best deal on that day! “Earth to FSA, come in please”.

From editor Emma Ann Hughes:

Thanks for you comments. Are you running into similar problems with other lenders? Are you still recommending lenders that undercut you? Mortgage Adviser and FTAdviser would like to know.

The mortgage market is now only for clients who cannot be bothered to source their own mortgage and would it be treating customers fairly if we did not suggest they should speak to the lender directly before we start working on their application for them.

It does appear to me the lenders are attempting to cut out the mortgage broker in what is an attempt to control their own lending. They are biting off the hand that has fed them for the last five years but now we are the guilty party and paying for their own short comings.
These so and so’s need to remember some of us have long memories and they can shove it up their own self-rightious backsides when next time they need us to sell their products for them. It’s now time for the worm to turn their backs on these dispicable companies. As for the FSA they will never stand up for the IFA as they have all along wanted a European model in which the banks and insurance companies dominate the distribution of products Thank goodness I am a fully paid up financial adviser and can at long last do the job I trained for I feel sorry for the mortgage only broker as they will definately be squeezed out.

We are all on about the FSA and the lenders but I think the real culprits are the MEDIA. Everything they sesationalise goes down the pan (remember Pensions) and what about endowments too - with profit plans are on the way back by the way, my very own is now back on target and thats after being in the red and amber, so the wheel will always do a full turn and some clever guy will reinvent it
So for me its business as usual my sourcing system TRIGOLD gives ”all of market rates” so I reckon I’m compliant. So what have we got, 6%+ suites you nicely sir, you had a good old run at 4.something% but its welcome back to the real world. Lets face it 6% was damn good 10 years ago when we were all earning less so keep your gripes and moans - be positive. If we are positive this will rub off, so let’s get on with the show.

P.S. can anyone tell me how sequestration works?

As an IFa who passes mortgages to others I am dealing with a case now that wil sail through because the income is adequate and the loan to value is ok ie: £1.6m borrowing £900k. I think that part of the blame must reside with the customers/borrowers who have stretched themselves to obtain properties that perhaps, in hindsight are beyond their true affordability in a difficult market such as that experienced currently. One can perhaps understand lenders who draw in their horns, particularly with the hogher loan to value clients and it is not surprising that they may conjure “inhouse deals” to keep their books bouyant and profitable. The last 10 years have seen brokers pressuring to have borderline deals accepted using occasional threats and now the shoe is on the others’ foot. Conversely, it is poor response to quality brokers when they are embarrassed by better direct deals having trawled the market to suit their clients’ purpose. No change really then just a different approach. I know it is hard but everyone one must “look outside the box”, perhaps considering “low redemption penalty” secured loans in the short term to consolidate client’s. There is no recession, only an invitation to panic that there might be one! I predict that this famine of deals will be short lived, six months maximum, although house prices may drop 20% in the process, for many, from a figure they never, ever envisaged anyway. Don’t be a lemming, they eat rubbish food anyway!!

The Banks have gone back into their shells. Overly cautious and using the credit crunch as an excuse to shore up thier profits by widening margins through hiked fees andincreased rate differentials. The writing is on the wall; the mortgage market is ‘dead’ as we know it. Even in good times the number of first time buyers was dropping and dual income mortgages were on the increase.

With salary levels likley to be stagnant for the next 2-3 years, inflation pressures outside of our control. Just who will buy residential properties unless their is a significant reduction in prices. Are the Banks looking to move out of residential lending? My guess is yes. Whic is bad news for IFA’s and mortgage brokers

i have never heard so much twadle in my life when lenders claim that they have didfferent pricing models for different channels. Everything was rosey in the garden until their reckless lending polices have come home to roost.

it is any excuse for the banks to continue to sell (ohh sorry Adise) on related products that quite frankly are poor value foer money.

its all abount profit profit profit and sod the rest!!!

Let’s not kid ourselves here, the lenders in question are Bankassurers who would delight in the demise of the IFA sector. The dual price practise may not breech TCF rules, but is certainly does on a moral standpoint. The next move will be to cut proc fee on the basis that the lender can justify a cut in the arrangement fees that they have hiked up over thepast 3-4 years. Lets not bury our heads in the sand on this - 5 years from now, any mortgage advice given on a whole of market basis will be all fee based and proc fees will be a thing of the past. The broker market will be smaller. Direct only mortgage sales also mean more sale add ons for the lender to boost profits as they do not have to adear to anynon cross sales agreements. If the lenders truely want IFA’s to give true whole of market advice, I challenge them to let us have the product codes to advise and apply for direct only products with an agreed remuneration structure we would have with our own clients - surely that is true TCF?

How strange for the FSA to be incapable of interpreting it’s own principles when it may have the consequence of levelling the playing field for the broker / intermediary.
Whilst sharp practice in business is not unheard of in the finance/banking world, it’s a shame the regulator hasn’t the gumption to treat everyone fairly. Surely regulation of the marketplace also involves some element of equalisation.
When the mortgage-only broker meets his final demise at the hands of this two-pronged attack, at least he can comfort himself with the knowledge that someone, somewhere in the regulators’ employment has also stepped closer to receiving their P45 through a workload deficiency.

So its not a problem with the FSA that banks offer a dual procing system.

Not exactly a suprise is it bearing in mind the complete and utter bias that the FSA has towards those lovely incompetents.

Good point from Nik re product codes, I’m glad I took the time to read the whole of this blog.
All leners offering packages act on product codes and then account/mtge numbers, just release the product code and those of us whi can work on true whole of market can then advise correcty without the problems with trying to issue a compliant KFI.
20 years ago when mortgages and B2l were arranged in the local Bank or B/S by the manager, it was another matter. We all know the deals are packaged and securitised, hence why they have to have a product code to be able to securitise the package.
Just as a NI humber is unique and account numbers at banks follow a modulus, hence if it’s not quite right it rejects, getting the product codes out in the open could have the effect the FSA want. The FSA produce their comparative tables, all they have to do is put in a column for the product code.
Don’t hold your breath though as it will take ten committees and a discussion paper followed by an interim report and a decision to do nothing before we know!