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Co-op pulls plug on selling mortgages direct to consumers

Co-op pulls plug on selling mortgages direct to consumers

The Co-op Bank will no longer offer mortgages directly to new customers from Friday (9 February).

Retail mortgage products will remain available directly with the bank for existing customers only.However mortgage business for the bank will continue to be written through the Co-op’s Platform intermediary brand going forward as bosses said “this is successful for us and continuing to grow.”

Co-op has already announced two interest rate reductions on Platform mortgage products in 2018 and bosses said they are now focused on keeping products competitive and working with broker partners to find the best deals for their clients.Existing customers will be able to manage their mortgage needs with The Co-operative Bank in line with their mortgage terms and conditions.

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All existing and new customers with mortgage in principles, decision in principles and applications in process with The Co-operative Bank, prior to Friday (9 February) will be honoured and completed within the standard terms and conditions of the offers.

David Hollingworth, associate director of communications at L&C Mortgages, said lenders have increasingly recognised that intermediary distribution offers an effective and efficient way to distribute mortgages and some lenders have long taken an intermediary-only strategy.

Mr Hollingworth said: "Many others maintain a close focus on their broker partnerships which will account for the majority of their mortgage distribution.

"In a market where advice is required and increasingly sought out by consumers the increased use of brokers looks set to continue.

"Platform is an established intermediary brand and therefore enabling Co-op to take this approach and build on that existing foundation."

Ray Boulger, senior technical manager of John Charcol, said Co-op Bank was simply recognising that it is more efficient and cost effective to use intermediaries to sell mortgages than trying to sell direct.

He said the fact that Co-op's branch network is small makes it more difficult for it to achieve economies of scale on direct sales. 

Mr Boulger said: "With sales through intermediaries applicants are pre-qualified by the broker, the bank only has to pay a proc fee on cases which complete and the broker is responsible for the advice.

"The Co-op has made a commercial decision that it makes little sense to continue direct sales which cost more to generate than introduced business."

emma.hughes@ft.com