The Midlands-based adviser, who asked not to be named, told FTAdviser his client’s fixed rate with Nottingham Building Society, which he originally recommended with the lender, was coming to an end.
He was researching remortgage and product transfer options for his client, but discovered that for an intermediary to complete an online product transfer with Nottingham Building Society a ‘validity code’ was required.
The code is provided to the client, not the broker, by letter three months before the end of their fixed rate term.
If the ‘switch’ is not completed 21 days prior to the end of the mortgage product term, the validity code becomes void and the only option for the client is to make the transaction directly with the lender.
With the rate of changes, naturally brokers are leaving it until the last minute to make a definite recommendation. We’re looking to keep it as flexible as possible. Broker
This practice, the broker said, blatantly cuts out the intermediary.
“It’s disingenuous and is particularly pertinent at the moment, with frequent rate changes,” he explained.
“Intermediaries monitor client recommendations on an almost daily basis to ensure they obtain the best possible product rate.
“For this to be done, recommendations are often deferred until as late as possible.”
At the time, the broker said the lender did not indicate any flexibility, so he felt forced to tell the client to go direct with the lender.
“It gives the broker a two month window to complete a transaction. With the rate of changes, naturally brokers are leaving it until the last minute to make a definite recommendation. We’re looking to keep it as flexible as possible.”
On the lender’s website, it says if borrowers already have a mortgage with Nottingham Building Society they can get in contact directly with the lender to understand their options.
Whereas for new customers, the lender partners with Mortgage Advice Bureau, drawing on hundreds of self-employed brokers as well as those employed by appointed representative firms.
“I have spoken to several brokers and they believe that Nottingham Building Society is not adhering to TCF [treating customers fairly] principles. As far as I am aware, no other lender operates in this ‘underhand’ manner,” said the Midlands-based adviser.
He also asked fellow brokers on Cherry Forum, a private forum for advisers, and found others have been “caught out” in a similar way.
“It just left a nasty taste in my mouth. To me, there’s no rationale behind it,” he said.