The challenges facing the larger mortgage lenders at the moment could not be more intense.
The agenda is complex: house prices are coming off their peak in London, Help to Buy is beginning to be withdrawn, more new entrants and competitors are taking market share, the base rate is at record lows and they are having to manage ring-fencing and horizon changes to capital and liquidity requirements.
With residential mortgages being seen as a cornerstone to income and profitability, acquiring more and retaining what you have already got has become core to success.
With branch networks now a huge cost and resource liability, combined with issues on legacy systems and cyber crime, there are few quick fixes. Most scale players also still have payment protection insurance and Plevin liability to work through, problems in the handing of arrears and other past business reviews that are slowing innovation.
The Mortgage Market Review ended up being all about advice and the last three years saw many big lenders not investing in getting their branch and telephone operations fully qualified to deliver advice through people.
What we have seen is a huge move to offer execution-only, particularly as a retention tool, initially via letter but now through scale investment in web portals to allow borrowers to pick a new rate at the end of their reduced rate period. This means it is likely about £100bn of mortgages are rearranged each year on an execution only basis.
What has become a subject for debate is what liability the introducing broker still has following a product transfer. Has the property been revalued to deliver the right rate for the customer? Have they been encouraged by waiving of early repayment charges or special exclusive interest rates to avoid taking advice? After the product transfer, does the customer still have full Financial Ombudsman Service rights?
Where lenders are deploying IT solutions that ask a series of questions with supporting help screens does this truly meet the definition of execution-only? In the intermediary world, disclaimers are not accepted by the regulator to avoid our advisory responsibilities. It must be hoped that purely by labelling a web portal as not providing advice that it is not carved out. As the existing lender offering a new rate they must be on the hook as advising.
Robert Sinclair is chief executive at the Association of Mortgage Intermediaries