The Bigger Issue
Dual pricing creates co Are lenders still dual pricing and trying to take business direct?
Having survived a drop in gross lending of 62% (£365bn to £138bn) over the last four years, intermediaries have proved the value they bring to lenders and more importantly to consumers. During this time you have seen lenders promoting their own direct retail channels through differentiated and preferential pricing, however, they will also point out that historically intermediaries would have had dual pricing in their favour. Generally, we have seen a dampening in the level of dual pricing and this has been driven by a number of factors. The likes of ING entering the intermediary market and not dual pricing has won it business and this has been recognised by their peers.
For some time now, the likes of Woolwich and Nationwide
haven’t been dual pricing and others including the Coventry and Platform have even pledged they won’t dual price. This is all helping to change the landscape of dual pricing together with the lower cost of acquisition through intermediaries. On the subject of offering existing customers deals, intermediaries have had great support from the likes of Halifax and Woolwich on product transfers where they will even pay a fee for the intermediary placing the deal. Intermediaries are happy with a level playing field but it is when lenders approach existing borrowers that were introduced by the intermediary and offer to waive ERCs that it is considered to be unfair. This is poor practice and is limited to one major lender in the main. In terms of selling other products, my view is the intermediary should be ensuring they are carrying out holistic advice with their clients and developing a multi-product relationship which wins loyalty. A quick hit on a mortgage will not achieve that and it is wrong to complain if others are then servicing the client needs. I believe as we see gross lending volumes improve, lenders will look to intermediaries to soak it up due to limited capacity in branch networks and the cost of acquisition. As this happens I believe dual pricing will continue to be less of a problem and some of the poor practices may change as intermediaries will show loyalty to lenders who have supported them.
Dev Malle, sales and marketing director, Personal Touch Financial Services
A recent report from HSBC suggested that direct lenders provide 100% of best buys in 2-year discount, lifetime tracker and 5-year fixed mortgage categories and that direct mortgage lenders have continued to dominate best buy tables in the past year. According to the findings 81% of the market leading rates are being offered directly by providers. But what the statement lacked was any balance, so in my mind it was therefore more akin to an advert than it was to a credible piece of research. Firstly, it sought to discount an intermediary deal which appeared high up the rankings by making some random negative remark about it. The press release completely ignores the fact that customers who go direct are offered the most biased (non-advised) sales process that is permitted by our regulatory regime i.e. the customer is offered only the products of that one company. Whilst the mortgage itself looks cheap it is often included within a bundle of poor value insurance products and if the customer’s application is rejected by that lender they are politely shown the door as they have no other products to offer.
If the customer were to repeat this process with four or
five direct lenders then they had better be prepared to take a couple of days off work.
If a customer wants advice on a whole of market basis then they ought to consider talking to a broker and if they do not fit the mould of the perfect borrower they should steer clear of high street lenders. Incidentally I haven’t seen many counter arguments coming from the high street lenders which are allegedly pro-mortgage intermediaries but not only continue to use dual pricing but also dual criteria in order to put their branches at an advantage to intermediaries. Mortgage intermediaries are rapidly losing market share to high street lenders and this is not only supported by the recent YouGov poll Precise Mortgages commissioned but also by Financial Services Authority data. In 2007 mortgage intermediaries had a 62% share of the mortgage market but in the first quarter of 2011 that has dropped to 47%.
Alan Cleary, managing director, Precise Mortgages
Our experts have had their say, now it’s your turn to have yours. Visit
www.mortgageintroducer.com and vote for the expert you think makes most 32 mortgage introDucer NOVEMBER 2011
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