"Instead of potentially going head to head with the adviser for repeat business, we are suggesting a much more collaborative approach, one which fully recognises the source of the initial business"
With intermediary distribution now delivering around 80% of all mortgage business to lenders, JLM wants to see lenders commit to a process which not only directs clients back to the adviser, but also means they provide client information and details to the adviser prior to any product renewal.
The network says an increasing number of lenders are "attempting to remove adviser influence" by contacting clients up to six months before their deal ends, offering direct-only products via a tick-box format, waiving early redemption charges, and providing other incentives.
The Association of Mortgage Intermediaries has also raised concerns about the increase in lenders encouraging straight product transfers at the point of remortgage.
Product transfer gross lending has now reached between £80bn and £100bn - more than a third of the entire residential mortgage market - but the AMI says lenders continue to refuse to specifically disclose the scale of this lending.
It says customers face potential detriment as a straightforward product transfer does not always trigger a revaluation, affecting LTV, rate and affordability.
Sebastian Murphy, Head of Mortgage Finance at JLM Mortgage Services, commented: “In our view it’s time to put to bed the age-old argument about who ‘owns’ the client, not least because the vast majority of lenders now receive the vast majority of their business via the intermediary channel. Instead of potentially going head to head with the adviser for repeat business, we are suggesting a much more collaborative approach, one which fully recognises the source of the initial business – the adviser – and seeks to keep them, and the provision of advice, at the heart of the relationship.
“Clients are often completely unaware of what they are getting themselves into when ticking a box to change products, or opting to go ahead with a cross-sale; we would therefore like lenders to work with us, refer clients back to their adviser and ensure they have the right deals for their current needs and circumstances. A formal agreement and commitment from a lender to do this would go a long way to ensuring client protection and sends a clear message that advice is right, proper and necessary, and it is the original adviser who is best placed to deliver this.”
Rory Joseph, Director of JLM Mortgage Services, added: “If clients do not wish to return to the original adviser that placed the business then that is clearly their choice and they are well within their rights to go direct to the lender or use another intermediary. However, we would like to see that choice presented up-front to them by the lender, and one way they can do this is informing both the client and adviser about up-coming renewal opportunities and showing a clear route-map back to the original adviser. It is then up to the adviser to make contact, and the client to make their decision.
“We believe that it is the distribution sector – particularly the larger network and mortgage club players – that are in the strongest position to drive the introduction of such a formal agreement forward. After all, the levels of business and the strength of their propositions could be particularly persuasive and should send a message to their own member firms that they are on their side, and committed to keeping business with them. This collaborative approach is certainly the one we will be seeking from our lender partners and we believe others in the mortgage market can give their backing to a more formal agreement which will provide clear benefits for all by, where possible, keeping clients with their advisers.”
