Don’t let Charter support remove advice from the mortgage process
Bob Hunt
25 October 2023However, it is still highly relevant and continues to have the capacity to deliver some meaningful change, and potential issues, not just for those borrowers who need to utilise its clauses but also for the intermediary sector.
Now, of course, the central tenet on which the Mortgage Charter is based is fundamentally sound – keeping people in their homes, and where they are struggling to make repayments working individually with borrowers to help them, be that looking at a move to interest-only or extending the mortgage term.
You might well argue – and I suspect some lenders will – that they were already doing much of this, but perhaps on more of an ad hoc basis, and what the Charter actually does is commit lenders who sign up, to carrying out these actions for each and every borrower who requests this type of support and help.
Pushed out of the loop
However, there is a key point of consideration here for advisory firms and it comes with how lenders are interacting with customers who, quite rightly, are communicating with their lenders when they feel they are struggling with payments, or worried about remortgaging, etc.
For instance, should a client feel like they need to switch to interest-only or extend their mortgage term for a limited amount of time, there is nothing to say the lender has to inform the original adviser of that interaction or communication.
None of those conversations with clients, or indeed the plans that are formulated, will need to be relayed back to the adviser, which means you will have little say in the actions agreed upon or the outcomes achieved.
That, as you might already have grasped if you’ve been in this situation, could well be problematic for advisers, because it has the potential to impact on the future relationship you have with that client, not least because you might have been able to have steered them down a more suitable path, and of course any decision made by the client is also going to impact their future mortgage ‘journey’.
Be the messenger
In that sense, at Paradigm we are urging advisers – if you’ve not done so already – to inform all clients about the Charter, why it’s important, what it can do for those who may be struggling with their mortgage payments, and what it might be able to achieve for them over the short-term.
What should also be prevalent in this messaging is a signposting to your business and to reiterate all the reasons why they are likely to have chosen your services in the first place.
Not least because of your understanding of their financial wants and needs at the time of the original advice, but also your greater awareness of them in the round, and the ability to deliver advice and recommendations based on more than a simple assessment of the short-term.
That seems to me, to be fundamentally important, because the lender will not have that knowledge or interaction. It is always a positive to be able to remind the client of– what I hope is – an ongoing relationship, and the fact you not only help during the original mortgage advice period, but also through the life of the mortgages that are taken out.
The threat of direct processes
There is a real danger here – especially in a world where product transfers are making up a bigger percentage of business for many firms and there is a greater chance of the adviser being ‘removed’ from future transactions – that a borrower/lender direct interaction based on the Charter, ultimately ends up with the borrower believing they no longer need the services of their adviser at all.
Especially if they are worried they might not be able to meet affordability criteria for remortgaging, and they subsequently feel they only have options available to them via their existing lender’s product transfer options.
In that sense, advisers should prioritise communications to all clients about the Charter. For a start, this may be the first they have heard about it and it ultimately might soothe any mortgage payment worries they are having – but also as a means to keep in touch with clients.
There is never the ‘wrong’ moment to do this, and if you are looking for support, help and resources on how best to make that contact, then don’t hesitate to utilise that which is available, whether from a distributor like ourselves or your network.
