Lender product transfers damaging promotion of advice: Sinclair

Lender product transfers damaging promotion of advice: Sinclair
Great work done by the MMR in order to promote the benefits of mortgage advice has actually been undone by some back-door manoeuvring by the lenders.

The large amount of direct, non-advised product transfer mortgages carried out by lenders is doing "great damage" to the promotion of advice, according to the AMI’s Robert Sinclair.

Speaking at yesterday's FSE Manchester event, Sinclair said: “Product transfers are the hidden bit of the market – we think it accounted for £100bn of lending in 2016 of which 85% was done direct, non-advised by the lenders. In that sense the great work done by the MMR in order to promote the benefits of mortgage advice has actually been undone by some back-door manoeuvring by the lenders.”

Sinclair echoed the words of participants who had taken part in a panel debate earlier in the day, who suggested advisers should be looking to grow their share of the product transfer market, in order to deliver professional advice to those customers.

He also suggested that ‘the hidden bit’ of the market was still unknown, and therefore the advisory profession could not truly know how much of this market was being lost, given the lack of CML data on this area of lending. “We need the data but we won’t have it until mid-2018,” he said.

Sinclair also looked ahead to the results of the ongoing Mortgage Market Competition Study currently being undertaken by the FCA. He said: “I expect a conclusion that it believes the mortgage market is competitive but still expect them to play about in a few areas.”


Areas where Sinclair anticipated action to be taken included around comparison sites, sourcing systems and panels, with new rules expected to be published at the end of Q1 2018.

He also re-iterated calls for a fairer FSCS system which would be based on an up-front levy for all financial products sold.

Sinclair said: “AMI would prefer an up-front product levy in order to fund the FSCS. This would cover every single financial service product and would put a kite mark on a product so that consumers would know they were protected; no kite mark, no protection.”

Sinclair did acknowledge that political and regulatory upheaval probably meant such a change was unlikely in the short-term, but argued that revisions could still be made.

He expanded: “At the least you should only pay for misdemeanours that take place in the areas in which you operate. If you advise on mortgages you should not be paying for problems in pensions, for example.”

He also said that AMI were seeking a 30% input into the scheme from providers, plus the trade body wanted to see quality discounts and risk-based levies for firms.

“Good firms who do good things, who have good PI cover, should pay less,” he argued. “Most firms who have PI cover, never even claim on it.”

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