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mortgage market.

“I think the question in this market is whether the banks really care if they’re lending or not – the broker channel is the side that will feel that first,” he explains.

UNITED WE STAND But brokers have power in numbers rather than size.

“The sad thing about this industry is that everyone is looking out for themselves,” says Lawton. “I can understand that from a commercial point of view particularly given the past few years but if it carries on we’ll see more and more brokers forced to leave the industry. You’ve got to look longer term.” Harnessing the power the collected

broker community has in a way that communicates the many benefits of advice over direct mortgage sales to consumers is easier said than done but Sinclair acknowledges the need to do it. Research from Retail Finance Intelligence’s UK Mortgage Council reveals only 16% of potential first-time buyers intend to use a mortgage broker in 2012 while 44% will go directly to a

lender. The study also revealed that 41% of future first-time buyers said they remained undecided on which sales channel to use. And yet more than 5.6m bank customers (11% of the adult population) are more dissatisfied with their bank than last year with research from Triodos Bank also showing almost 9m (18%) customers would not recommend their current bank to family and friends.

“I absolutely think people should go to an adviser,” says Sinclair. “Advisers have to justify which lender and which product they recommend and why they’ve recommended it every time. It’s much more consumer-centric and responsible than bank advice.” Ben Thompson, managing director of

L&G’s mortgage club, has it right in his firm’s mortgage “manifesto”. “Intermediaries have access to the very vast majority of all mortgage products as opposed to just one lender range, which you expect from going to a lender directly,” he says. “Well over 90% of all intermediaries offer not only breadth of choice but full advice. Merely one third of all lenders can offer advice in this way and none can offer the same

breadth of choice that an intermediary can. Intermediaries should work hard to help customers to understand this, where research shows many simply don’t. This would result in better informed and happier customers.” If it’s so simple, what’s the problem?

Why are intermediaries picking up the scraps laid out to them by lenders instead of turning the tables and speaking to consumers with one voice? The answer to this problem is not straightforward and more importantly it’s not cheap.

“If the industry genuinely wants to see AMI lead on a campaign to raise the profile of advice among consumers we have to address the question of how to fund it,” says Sinclair. “In a world where even individual registration is struggling to get off the ground and where Money Advice Service has thrown £20m at advertising to gain any kind of brand awareness that is very hard to get traction. “There are firms out there with bigger budgets than I have, the question is how we harness that in a cohesive way to get the traction we need.” John Heron, chairman of the

Getting the balance between direct and broker by

Mike Lawton managing director, Which? Mortgage Advisers

Since the start of the banking crisis I have dealt with many customers of all types of wealth and time and time again have been told that they have lost faith with their bank or high street lenders and the bond of trust they had with their bank just isn’t the same as it once was. That said, I have forged many close relationships with the lender community and when a case is properly presented have always been provided with great service, which leads to more business.


It is though highly frustrating that some lenders offer more competitive direct only products, or won’t even engage the broking community and alas I cannot see this changing in the near future. As a relationship broker, the client is more likely to contact you than they are their bank or building society to check on the best savings rates or request a professional recommendation based on who you know and trust. How do we as brokers combat

the current situation and ensure we stick to the Treating Customers Fairly principles? Here at Which? Mortgage Advisers we are recommending direct only mortgages as well as the most suitable mortgage that we can access on behalf of the client. Whilst this doesn’t provide any revenue, we do stand by our principles in that to be

a consumer champion the customer should be made aware of the most cost effective solution that meets their needs. Does that mean that we shouldn’t challenge the lenders to change their stance? Absolutely not - but alas in the current economic climate and the need for some lenders to focus more on their balance sheet and profitability, this may prove to be a long and difficult challenge. I do have sympathy with many lenders, as I understand their predicament and with limited funds, it is perhaps easier to control their lending volumes internally. I am sure we will all be eager to see how this moves forward and I hope we make progress together -though those cynics will no doubt think otherwise. I live in hope.

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