Not satisfied with being responsible for the lending policies of the past that can be directly attributed to the current credit crunch, lenders are now cutting out of the market their biggest source of business – yep, that’s right the mortgage adviser/IFA, while producing around 70 per cent of all lenders’ business, is now being treated like some sort of leper by the financial institutions.
I refer, of course, to the fact, that lending institutions are offering different mortgage deals that are more competitive direct to clients.
To add insult to injury, it was the adviser that introduced the client to the lender in the first place.
The example below amply demonstrates the point.
We have recently carried out research for a longstanding client, who we introduced to the lender two years ago for a remortgage. Our time was spent, creating an up-to-date fact-find, producing a KFI, writing the suitability letter and helping the client to complete their application form, enabling them to proceed with our recommendation, a remortgage with an alternative lender at 5.89 per cent with a £995 fee.
However, the existing lender rang the clients direct and offered out clients an exclusive – no intermediaries allowed – 5.75 per cent rate with a fee of £599.
We have been undercut again. We cannot offer anything near this rate from the choice of products offered to intermediaries by the existing lender.
We have approached the lender to ascertain the reason why they felt the need to undercut us, we have been advised “it is only for a few more weeks”.
As we package each case and hand the lenders the business on a plate, when did the adviser become the enemy to lenders and what have we done to deserve it.
A bottle of champagne for the first reader to correctly identify the lender.
Managing director Wellington Financial Management