View more on these topics

IFAs caught in the mortgage Cat trap

Intermediaries and lenders believe finalised plans for Cat-marked

mortgages have muddied the already murky waters surrounding the role that

IFAs will play in the benchmarked market.

Legal & General marketing manager housing market Richard Verdin says: “I

genuinely do not think that IFAs have differential earnings on their mind

when they are advising on a particular product over another but if

Cat-marked mortgages are not sold in large numbers, a trap will be set for

IFAs to get caught in.”

Savills Private Finance managing director Mark Chilton says: “How will

brokers provide best advice when they will not get paid for advice on one

product? The less reputable broker will skew advice away from Cats.”

Many lenders question whether the Government&#39s decision to encourage the

“execution-only” route for mortgages will help the FSA achieve its goal of

a financially empowered and aware public.

Some believe that it could lower the knowledge base of clients and confuse

the public into believing that Cats are Government-approved and the best

product regardless of other options.

Scottish Amicable national mortgage manager John Malone says: “It will be

a big issue for IFAs to get over to clients that the Treasury&#39s kitemark

does not necessarily mean it is the right product for every client.”

Verdin says: “We seemed to be heading down the fee route but the latest

news seems to be pushing against the wind. But with a bit of luck IFAs will

be able to prove their value.”

As the amount of time and admin it takes to advise a client on a mortgage

plus the admin has grown, IFAs are wondering if a procuration fee alone

will be a fair reward for their advice.

Mortgage Code Compliance Board chief executive Luke March says: “It is a

great disappointment. If lenders want Cats to succeed, they need to

increase the procurement fee. If brokers are trained well, they should be

well rewarded.”

To make matters worse, while payments to advisers are restricted, their

workload may increase, with every intermediary having to rewrite their

terms of business.

Malone says: “Section 165 of Consumer Credit Act says the maximum a client

can be charged is £5 if the case does not proceed within six months. IFAs

will need a sentence in their terms of business which is a caveat on

Cat-marked mortgages.”

A new set of uncertainties have been added to what is perhaps the most

uncertain sector of financial services.


Lifestyles dictating demand for loans

Flexible loans are proving popular because of the changes in UK consumers&#39lifestyles, according to Yorkshire Building Society.Yorkshire says changes in working practices mean that over 50 per cent ofits loan applications are for flexible products.The society set up its flexible mortgage last November and says the quicktake-up is due to demand among consumers for more […]

There is nothing like a name

Email and website addresses are becoming essential marketing tools forIFAs. Internet experts say say an internet domain name will soon be asimportant to an IFA as a phone number and getting the right name isessential.The Goodfellow Group managing director Simon Burgess says: “Domain namesand email addresses are massively important marketing tools for IFAs. Yourcompany name […]

Government to change annuity rules

The Financial Times reports that the Treasury is planning to raise the annuity age limit to 80 from the current 75.The decision follows extensive lobbying by trade groups and MPs who see the move as providing greater flexibility to pensioners looking to invest.As the law currently stands, individuals must either buy an annuity or take […]

Swiss Life finds key to partnership protection

Swiss Life is introducing a trust which will allow partnerships to get thebenefits of keyperson insurance for the first time.The trust overcomes the problems of English law, which states that alimited company is legally separate from its shareholders or staff but apartnership has no legal existence separate from the partners of the firm.Traditionally, this has […]


News and expert analysis straight to your inbox

Sign up


    Leave a comment


    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