View more on these topics

Product matters

Being a supp-orter of the mortgage code and its stance on advisers improving customer perception of the industry, I was dismayed to see the new Nationwide Building Society products and its claim that “Cat standards demonstrate Nationwide&#39s commitment to open, honest and transparent mortgages.”

The budget options, which provide an up-front discount followed by a loading over years three to five appear, on the face of it, to be discounts with a five-year penalty period. However, they are actually capped rates where the cap is at 9.99 per cent.

Although this cap allows the budget option to fall into the voluntary Government guidelines, I feel these products do not follow the spirit of either the Cat standards or the mortgage code.

Surely, if any lender can bring out a discount with extended penalties and put this into a capped wrapper where the cap is so high that it is unlikely to be reached in the short term, this negates one of the main reasons for the introduction of Cat standards.

Irrespective of Catmarking, borrowers should be made aware of the features of products and these should be matched to borrowers&#39 needs. We all know that when you ask a client: “Would you prefer flexibility?”, they almost always answer yes but if you then also ask “Why?” or “At what cost?” the borrowers tend to be more interested in the difference in payment levels.

Borrowers who are unlikely to use borrowback or payment holiday facilities are likely to benefit more from a good discounted rate or a good fixed rate irrespective of Catmark.

Recommended

Scarborough hits base

Scarborough Building Society has designed a flexible base rate tracker mortgage that equals the Bank of England base rate for the first six months.The mortgage is available on loans of up to 95 per cent of valuation. There are no arrangement fees and no redemption penalties for borrowers who redeem the mortgages.Overpayments, underpayments and payment […]

David Shelton

Now that it has finally arrived, let us pause and consider what stakeholder is actually about. “Pensions for the people”, “the death of advice” and “provider ruin” are just some of the claims. Many believe it could lead to some significant changes that will hit the industry. Pensions for the people is a laudable aim. […]

Compulsory purchase

The Government&#39s flagship pension project has finally been launched after a lengthy and controversial development process. The introduction of price capping amounts to arguably the biggest intervention in the free market of this Government&#39s administration and the price-capping features will doubtless be noted by other professions across the economy. The launch comes just as IFAs […]

Don&#39t rely on compulsion as an escape route

The pension industry must not rely on compulsion to help it escape the 1 per cent nightmare. Of course, if all those employer-backed stakeholder plans and qualifying GPPs become compulsory, the numbers begin to look just possible. But is compulsion really on the agenda? Consider this scenario. In the two or three years after Labour&#39s […]

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