CML: 7-day switching success dependent on start point

Discussing the government's call for seven-day product switching, the CML said that whether the target is realistic depends on 'when the clock starts ticking'.

Related topics:  Mortgages
Rozi Jones
25th May 2016
CML

The consultation refers to the 7-day period beginning "when the consumer gives their consent to switch to the new provider, and the new provider accepts that customer".

In the mortgage market, the CML says this may imply that the 7-day period would only begin once all the necessary risk assessments, affordability checks, and confirmation to the customer has been given.

"If that is the correct interpretation", says the CML, "then many lenders would potentially already be operating to the 7-day timescale for completion".

The CML added that the government "specifically acknowledges that there are some major differences in the mortgage market compared with other markets covered in the scope of the call for evidence".

However it argued that there are specific regulatory requirements about the things that lenders need to do before they can agree and complete a remortgage, and a valuation of the property is also a necessary component. The Council says these "may be harder to complete to a tight timescale than the processes needed in some other sectors".

It also noted the high degree of intermediation which helps consumers to remortgage, stating "there is no evidence from the market that would suggest that the timescales to complete remortgages are seen as an obvious barrier to the incentive to do so" - a major argument in the call for inputs.

The CML also highlighted that the mortgage market will itself already be subject to a targeted competition study in Q4 this year.

Paul Smee, CML director general said:

"We fully support the switching principles, and our members have long recognised that speed (as well as cost and service) is frequently valued highly by remortgage customers. However, whether a 7-day target is realistic, given tasks that lenders need to complete to fulfil risk and regulatory requirements, depends on when the clock starts ticking."

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