London & Country

jediknightwarrior

This is exactly why I raised this issue. I believe London & Country advertising is in breach of the FSA Financial Promotions Regulation and also infringes upon the spirit of "Treating Customers Fairly".

If products are shown on their website it only fair to assume that the average man on the street would expect these products to be included in their recommendations.

Mortgageman

Hi all, sorry - missed this the first time round (didn't realise anyone had added to the thread since I posted).

There are a few occasions where the lender does not accept applications from intermediaries and/or doesn't pay brokers for introducing business. I'm glad that you recognise we give these deals best buy profile on our website when it is deserved and I can assure you that it is not done on the basis of whether there is a paymemt on that product or not. I think it would be fair to say that other brokers websites do not even mention these products. We also provide Best Buy tables to national press and always include the products that merit attention, whether they are available to brokers or not.

As I am sure other brokers here will testify, there are many factors to consider when making an application - not just the rate. Often we find a client has a deadline, either because they are purchasing a property or because they are moving on to a higher rate at the end of an incentive scheme. In many other cases the lenders underwriting criteria is crucial and sometimes that rules certain lenders in, or out - something that has nothing to do with rate. Finally, depending on the loan size deals that look like they have the lowest headline rate may not always work out best, when factoring in arrangement fees etc.

Please remember that we are a business, so where we recommend a direct deal (and yes that does happen) and where we will not receive a payment - then we won't actually process the application. It would not be fair for us to be expected to process all of the paperwork and chase a case through with a lender for nothing, so in this circumstance it is a case that the customer simply needs to submit their application directly to the lender themselves. Whilst this means we inevitably lose some clients we find that the vast majority of our customers want our help throughout the whole mortgage process and so would rather apply to a lender and have our back up, help and support - sometimes that may mean they get a slightly higher interest rate, but then that's no different to a customer buying premium brand goods beacsue of their high quality, service and support etc.

Indeed one of the benefits of approaching a broker is that a good one will offer real insight into lender service levels and provide added weight should anything go awry with an application. At L&C we take Treating Customers Fairly very seriously indeed and have built our business on providing high quality, free and whole of market advice. It seems very strange indeed to be criticised for including direct products in best buys as this is the most transparent and customer friendly approach, the alternative is not to include them, surely something that would be far less fair for customers. Last year we introduced business to 92 different lenders and this underscores tangibly that we do indeed operate on a whole of market basis and I hope this note clarifies that adequately.

payless

MortgageMan - posts however do imply that the FD rate was not recommeded or discussed until the clients mentioned it themselves.
( Remember similiar discussions over Brit Bs in past also)

Now I understand why that would be , but do you think it is fair to state that you do something on your website - see my earlier post ( and in fact imply this makes you better than some others) , when the reality appears to differ.

Mortgageman

The fact remains that our advisers are free to recommend any product, including direct ones, but where it is a direct deal we direct the customer to that institution, as we can't carry the cost of administrating mortgages where there is no income to us.

You mentioned First Direct and Britannia, we have sent many customers in to local Britannia offices in the past, and likewise have supported first direct. The facts speak for themselves and we have built a reputation over the years as being a consumer’s champion hence this post to try and clear up any misunderstanding.

Dan_Collins_2

This thread is becoming a bit of a beat up L&C and poor old Mortgageman defending them. At the end of the day maybe L&C should leave products that they wont recommend out of the tables. At the end of the day, like me and any other broker on here, L&C are out to make money. Why fanny around, I have placed business and not earned, they are great clients and I have earned plenty from friends and family they have given my details to. But if a new client I had never met came along and they new about a deal I would send them direct, I cant afford to work for nil and why should they pay me a fee when they can go direct!

payless

Dan I don't disagree .. although have you read the L&C website - the bit I have posted #30 in bold above .

Dan_Collins_2

Yeah but the big firms get away with it! TCF is for the smaller firms to worry about so that the FSA dont to pick any fights!

silvercar

As a customer, I think it is better to say "here is the cheapest deal you could get, but it would mean that you would have to do the application yourself" rather than not mention a cheaper deal.

Debt_Free_Chick

payless wrote: »

I agree , but perhaps they should be a little clearer - the following is lifted from their site

Will they put your interests first? Your broker will receive a commission from the mortgage lender for recommending their product. Not all mortgage lenders pay commission, however. If there was a mortgage that really suited you and paid no commission, would the broker still recommend it? A reputable mortgage broker will keep your interests at heart at all times. Address this issue with them before proceeding.

It goes without saying that L&C Mortgages fulfills all of the above criteria.

I understand completely where you're coming from, but I don't think we should expect an independent broker to be aware of all those deals that are only available direct. Especially as direct deals are often done on an individual basis, depending on the applicant's circumstances. For example, the existing lender might make a "special offer" - but an independent broker would never be offered the same deal.

The quoted part from L&C's site is saying .... "we'll get the best possible deal available to us in the market. You might get a better deal if you go direct. If you do, then we'll agree if it's a better deal and leave you to go ahead with it, without making any charge for the work we've already done. If you're not sure whether you might get a better deal elsewhere, ask us".

Although it could be clearer that this is what they mean

jediknightwarrior

Hi Mortgageman, thank you for your reply.

Sorry, I do not want this to sound like a witch hunt, however, I am trying to settle some genuine reservations/concerns with the consumers interests foremost in my mind.

Mortgageman Quote: There are a few occasions where the lender does not accept applications from intermediaries and/or doesn't pay brokers for introducing business.

Reply: Can you please clarify. When looking at your best buys or performing an in depth search on your website, I see that a lot/most of your current products do not offer the ability to get an online quote/apply online (65% of the products in your best buy tables). It states that these products are only available via your advised route. My understanding, please correct me if I am wrong, is that these products do not pay any commission.

Can you please let me know if this is correct?

If so, should it not be highlighted to customers as, contrary to your assertions highlighted by payless above which can be found here, my understanding is that you will not arrange these products or check if the clients qualify?

If somebody uses your advised route, who may have seen the direct only products listed on your website, whether they highlight the products to you or not, do your advisers always include these in their recommendations and check to see if they qualify before discounting them as an option? If not, are customers made aware that many products listed in your best buys do not form part of your recommendations? If on the other hand, they are included in your research and one proves to be a better option, do you always highlight this in your reasons why letter and justify why the product has not been recommended?

As an example: Assuming I earn £100,000p/a, require a like for like interest only remortgage over 20 years for £299,000 on a property of £600,000 and have investments to cover the loan. I'm looking for a 5 year fixed rate with the lowest total cost over 5 years, no extended ties. Employed, no other debts, no credit problems or time constraints.

Unprompted by the customer, if I mystery shopped these criteria, would your advisers recommend the First Direct product mentioned on your website? If not, would they cover it in their reasons why letter?

Mortgageman Quote: I'm glad that you recognise we give these deals best buy profile on our website when it is deserved and I can assure you that it is not done on the basis of whether there is a payment on that product or not.

Reply: I applaud you for including them on your website. My genuine concern is whether this is to keep you in good stead with the media/ generate enquires as I do not believe all these products are then fully considered in your recommendations and justified to customers if they are not recommended.

Mortgageman Quote: I think it would be fair to say that other brokers websites do not even mention these products.

Reply: I do not believe any company, not restricted to financial services, should advertised products they can not deliver/offer/recommend. I am not trying to be flippant, however, I also believe this may have something to do with the ASA's misleading advertising rules and the FSA's Financial Promotions regs.

Mortgageman Quote: We also provide Best Buy tables to national press and always include the products that merit attention, whether they are available to brokers or not.

Reply: Could be wrong, however, again I think this could be construed as a grey area as this will lead consumers to believe you are able to arrange/recommend products which you in fact can not/do not. Personally, I think this should be left to the likes of moneyfacts as there is possibly less conflict of interest etc... (Although I'm note sure Mike Lazenby would agree!)

Mortgageman Quote: As I am sure other brokers here will testify, there are many factors to consider when making an application - not just the rate. Often we find a client has a deadline, either because they are purchasing a property or because they are moving on to a higher rate at the end of an incentive scheme.

Reply: I am sure they will, however, I am also sure they will not include products in their marketing material that they can not/do not include in their recommendations and claim that these products are analysed.

Mortgageman Quote: In many other cases the lenders underwriting criteria is crucial and sometimes that rules certain lenders in, or out - something that has nothing to do with rate. Finally, depending on the loan size deals that look like they have the lowest headline rate may not always work out best, when factoring in arrangement fees etc.

Reply: I have no issue with this provided all the non commission paying products listed on your website are included and analysed before making your recommendations or clearly shown on your website as direct only products. Do you use trigold, mortgage brain or an in house sourcing software? Are the direct only/ non commission products listed on your website analysed within your chosen software so that each time a recommendation is made your audit trail can enable you to identify why these product were not recommended?

Mortgageman Quote: Please remember that we are a business, so where we recommend a direct deal (and yes that does happen) and where we will not receive a payment - then we won't actually process the application. It would not be fair for us to be expected to process all of the paperwork and chase a case through with a lender for nothing, so in this circumstance it is a case that the customer simply needs to submit their application directly to the lender themselves.

Reply: I fully appreciate that you are a business and need to make a profit and totally agree that where a non commission paying product is recommended then the client will have to apply directly. My concern is that the direct only products listed on your website are not routinely highlighted to customer allowing them to make an informed choice as to merits of applying direct vers paying a high price for a commission paying product which you will then assist them with.

Mortgageman Quote: Whilst this means we inevitably lose some clients we find that the vast majority of our customers want our help throughout the whole mortgage process and so would rather apply to a lender and have our back up, help and support - sometimes that may mean they get a slightly higher interest rate, but then that's no different to a customer buying premium brand goods because of their high quality, service and support etc.

Reply: I agree a lot of customers will rather have your back up, however, is the risk of getting a higher rate always highlighted to customers? i.e do you tell customers that there are products listed on your website which are only available directly from lenders and that these may be better for them? This would allow them to weigh up the benefits of your back up against the higher price?

Mortgageman Quote: Indeed one of the benefits of approaching a broker is that a good one will offer real insight into lender service levels and provide added weight should anything go awry with an application.

Reply: I agree a broker will provide a real insight into the service levels of commission paying providers they regularly use. However, how do you provide customers with an insight into lenders service levels for the direct only products listed on your website? How do you do this when you do not place business with them? Again this a about fair disclosure.

Mortgageman Quote: At L&C we take Treating Customers Fairly very seriously indeed and have built our business on providing high quality, free and whole of market advice.

Reply: To strengthen this position, why not highlight on your website which products are only available direct and therefore not included in your recommendations.

Mortgageman Quote: It seems very strange indeed to be criticised for including direct products in best buys as this is the most transparent and customer friendly approach, the alternative is not to include them, surely something that would be far less fair for customers. Last year we introduced business to 92 different lenders and this underscores tangibly that we do indeed operate on a whole of market basis and I hope this note clarifies that adequately.

Reply: I am not criticising you for including them. However, I am concerned that you do not highlight which products these are in view of the fact they do not routinely form part of your recommendations.

If directly only/non commission products are shown in a best buy tables you provide to the media and are also shown on your website, then I feel it is only reasonable that the average man will assume you can/do routinely recommend these products. In view of your assertion here, they should always form part of your recommendation and justification should be provided if they are not recommended. Not doing so, will in my opinion, only leave you open to a potential misselling complaint further down the line.

Using the £299,000 remortgage example I mentioned above. How will the customer feel in 6 months time if he finds out that the First Direct product he saw on your website was not recommended as it did not pay any commission. Assuming this as left him for example £3000 light over 5 years, I wonder what he will do and how the FOS would view this?

In summary, my belief is that you are potentially misleading customers. For this, I see 3 potential remedies:

1. Continue as you do now and highlight on your website which products are only available directly from the lender and those that do not pay any commission and
a) confirm these will always routinely form part of your recommendations and be justified when discounted as an option. This will allow customers to make an informed decision. or
b) amended your wording here and highlight that direct only products do not form part of you research.

2. Remove all direct only / none commission paying products from your website and amend your wording here.

3. Keep things as they are.

In my view 1a, 1b and 2 are all valid options. 1a being my preferred route.