In the US, brands have disappeared from a lending perspective. All that counts is price and consumer product match. The progress of UK market towards this model terrifies many lenders because the only winners are the lowest-cost producers. Yet, they brought this retention conundrum on themselves by failing to recognise the conflicts of supply and demand.Although lending growth over the last 10 years has been massive, it has been fuelled by property inflation and intermediary injected churn. Some lenders are challenging this by introducing low-cost origination and high exit fees. Although there has been much debate in the press about the rise of exit fees, they have failed to recognise the true intention – to improve retention capability. This can be seen in the current low-interest environment. For some reason, the market, FSA and intermediaries have allowed lenders to retain an absolute ability to change many costs relating to the customers’ maintenance of their mortgage. A bright spark realised that this meant that you could dilute customer acquisition costs by increasing other fees, including exit costs. The FSA wants the industry to produce a realistic KFI when actually a big factor in the absolute cost of the loan over a predetermined period of time is unknown to us, the borrower or the lender at the time a loan is executed. Are we to be victims of a misselling scandal when Halifax or Alliance & Leicester or decide to put their exit fees up by 100 as they are entitled to do. There is an urgent need for the total structural costs of a mortgage to be contractually bound at the outset. Exit fees are but one technique used by lenders in their sustained retention policy. They are getting cuter at pricing-deterrent retention products. With the flexibility they have in other costs sectors, there is a renewed confidence that the business they are acquiring today will stay with them forever. While lenders try to frighten inter- mediaries, the real threat lies on customers’ own laziness. We have to promote ourselves as an industry as the customers’ perpetual ally. Low-cost, customer-retention campaigns by intermediaries will always beat the lenders’ best efforts. Will this end? Who knows but don’t be dismayed every time you hear one of your brokers telling you the customer has gone back to his existing lender. It is simply the brokers failure to sell the benefits of what you do well enough.