These are a few of the questions that lenders should be asking themselves as they seek to exploit the limited lending availability and bring about their own version of a correction in the distribution balance in the market.
In the age of treating customers fairly, it is inconceivable that lenders are being allowed to compromise the intermediary channel which accounts for 85 per cent of the market. However, that is exactly what they are doing with dual-pricing.
Dual-pricing in itself is not the issue. Sure, it is annoying but we operate in a free market. However, there is an additional sting in the tail. Not only are lenders offering more competitive deals exclusively through their own branches but rumour has it that staff are contacting clients introduced by brokers and selling exclusive products over brokers’ heads.
As the RDR rumbles on, with its anticipated read across to the mortgage market, lenders are not doing the industry any favours with their sales – as opposed to advice – strategy. They are not only compromising the intermediary channel, that is best placed to offer advice, but threatening its survival.
Dual-pricing has led to talk of a new disclosure requirement – to advise clients that there are better deals if they go direct – and concerns that this move would seriously undermine the service that the majority of intermediaries set out to provide.
Those brokers who are taking enforced leave during this period because they cannot compete with direct deals have missed the point. They should review their remuneration strategy rather than shut up shop. If brokers charge a fee for their advice, it is immaterial whether the client goes direct to the lender.
There is a fine line between competitive and anti-competitive behaviour. Lenders which persist in these dirty tricks are at risk of sacrificing an important channel.
Do not forget that lenders are not equipped to deal with high lending volumes – that is why they have been happy to run with a form of outsourcing which is brokers completing the paperwork and other elements of admin. Like the Terminator – or Indiana Jones – they will be back. Let us hope there are enough of us left to welcome them back with open arms.
Gerry O’Brien is a director at Home of Choice