LENDER PRODUCT TRANSFER ACTIVITY HAS UNDONE MMR FOCUS ON ADVICE, SAYS AMI’S SINCLAIR

17 May 2017

The large amount of direct, non-advised product transfer mortgages carried out by lenders has done great damage to the promotion of advice, according to AMI’s Robert Sinclair

Speaking at today’s FSE Manchester event, Sinclair highlighted the large amount of product transfer activity – believed to have reached £100bn in 2016 – undertaken directly by lenders and suggested it was undermining the provision of advice.

“Product transfers are the hidden bit of the market – we think it accounted for £100bn of lending in 2016 of which 85% was done direct, non-advised by the lenders,” he said. “In that sense the great work done by the MMR in order to promote the benefits of mortgage advice has actually been undone by some back-door manoeuvring by the lenders.”

Sinclair echoed the words of participants who had taken part in a panel debate earlier in the day, who suggested advisers should be looking to grow their share of the product transfer market, in order to deliver professional advice to those customers.

He also suggested that ‘the hidden bit’ of the market was still unknown, and therefore the advisory profession could not truly know how much of this market was being lost, given the lack of CML data on this area of lending. “We need the data but we won’t have it until mid-2018,” he said.

Sinclair also looked ahead to the results of the ongoing Mortgage Market Competition Study currently being undertaken by the FCA. He said: “I expect a conclusion that it believes the mortgage market is competitive but still expect them to play about in a few areas.”

Areas where Sinclair anticipated action to be taken included around comparison sites, sourcing systems and panels. “On panels I expect them to ask, are they working in the customer’s interest,” he said. “Is all the money transparent? They will ask for clarity on how, for instance, these incentives work.”

Sinclair said it was likely that the FCA would be reporting back on the study in September this year, with new rules published at the end of Q1 2018, to be implemented during next year.

FSE Manchester is taking place today at The Emirates – Old Trafford. Visitors have access to over 60 exhibitors including lenders, distributors, networks, insurance providers, technology companies, and many more.

Further details on all Financial Services Expo events in 2018 – Wales (June), London (September) and Midlands (November) are now available at: www.financialservicesexpo.co.uk