View more on these topics

Cat would mark out flexi ground

Will Catmarks on flexible mortgages benefit consumers or will they be influenced into choosing an unsuitable product?

The Government and the Council of Mortgage Lenders are considering creating a Catmark-style benchmark for flexible mortgages. Sun Bank approached the CML last month as it feared that, without an industry standard, consumers could be misled by so-called flexible products that only have a limited number of flexible features.

The proposed benchmark would ensure products incorporate the six generally accepted principles for flexible mortgages – daily interest calcu- lations, overpayments, underpayments, payment holidays, lump-sum drawdowns and no early redemption penalties.

However, London & Country mortgage adviser David Hollingworth does not believe borrowers always need a product which contains these features. He says: “Potentially, you would have a Cat-standard flexible mortgage that says it can do a lot of these things but having a Cat standard does not necessarily mean this is the best product.”

Hollingworth feels the CML could not apply a Catmark to a flexible mortgage without incorporating some of the existing Catmark mortgage standards, especially those relating to variable rates. Placing a Catmark on a product could also have a negative affect on its popularity due to the performance of current Catmarked mortgages.

He says: “Lenders are not able to offer the most competitive rates on Cat-standard products and so people are not getting them. Although they make the terms of the product clearer, borrowers will still look for the best deal. It follows that a Cat-standard flexible mortgage would not be as competitive as a non-Cat-standard product.”

The idea of creating a Catmark for a flexible mortgage without creating one for every mortgage product seems like a disjointed approach, according to Mortgage Express managing director Tim Dawson.

He believes, rather than adding complexity to a product by creating Catmarks, it is more important for a product to be transparent.

“People buying mortgages are intelligent and they need to be able to make an informed choice through having all the details and this is more important than having a Catmark,” he says.

Dawson adds that a few months ago the CML had been looking into the idea of producing a product sheet to set out clearly all the features of a mortgage and feels this would be more use to borrowers than having a Catmark.

He says: “I think the negative effects of Catmarks are that people will assume the product is ok without looking at it in detail. Borrowers need to make the decision themselves and not rely on Government Catmarks to make it for them.”

But specialist lenders, such as Sun Bank, are seen as the ones which will want to create a benchmark. Companies that are not household names will welcome the Catmarks as this will enable them to get their message across to consumers and brokers.

First Active director of marketing Ian Giles says: “We are excited as Catmarks will clear up a lot of confusion in the market about what constitutes a flexible mortgage.

“We believe there are only six to 10 lenders offering products that are truly flexible and the others are claiming flexibility as a way of jumping on the bandwagon.

“We want a level playing field and we do not like lenders that put flexible on the front of their marketing literature when they do not offer all the criteria.

“Catmarks will allow consumers to bypass lenders that do not hit the main bench mark and although choice is a good thing I think limiting the choice will mean that better decisions are made.”

Recommended

Mining a rich theme

In the light of a changing outlook for the global economy, fund managers are being forced to rethinktheir strategy.The economic landscape of the world is rapidly changing. Barriers and regulations, which were significant features in the past, have either been abolished or are in the process of being scrapped.With the abolition of border controls in […]

Thousands of IFAs set for rush to sit mortgage exams

IFAs could be forced to sit mortgage exams in their thousands in the next two years following the latest training and competence announcement from the Mortgage Code Compliance Board.The new T&C requirements demand that all advisers hold the Certificate in Mortgage Advice and Prac-tice or the Mortgage Advice qualification.The requirements could mean training bodies hav-ing […]

Staff cash in windfalls to quit Chase Fleming

Chase Fleming Asset Management has been hit by a wave of resignations this week as staff cashed in payouts from the Chase Manhattan takeover.The departure of chief investment officer Tony Robinson was preceded by the resignations of two senior sales directors and two fund man- agers, with further departures expected to follow in the coming […]

Money Channel loses Faith

Former pop heart-throb Adam Faith has stepped down as executive director of the Money Channel, the TV station he founded.The company announced interim losses of £4.9m last week. It has attracted weekly audience figures of only 130,000, a figure it is looking to boost through a shift towards the sale of on-screen services with digital […]

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

    Leave a comment

    Close

    Why register with Money Marketing ?

    Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm

    Email: customerservices@moneymarketing.com