Emma Ann Hughes  

What providers should tell your clients

Emma Ann Hughes

Emma Ann Hughes

An analysis of the mortgage market by the Citizens Advice Bureau (CAB) revealed one in 10 borrowers face a penalty of more than £1,000 a year if they remain on an SVR at the end of their term.

A failure to switch to a better rate at the end of an initial term can be due to stricter affordability criteria introduced by the Bank of England in 2014 preventing borrowers from remortgaging – the so-called ‘mortgage prisoners’.

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But Citizens Advice found it can also be due to a lack of consumer knowledge regarding the ability to switch to a better product – and clearly the failure of lenders to flag to borrowers the fact they are no longer on the best deal available to them.

According to CAB’s analysis of the 4,147 clients with mortgages it spoke to last year, older consumers, people on low incomes and those with lower education levels are more likely to face the extra payment, with many deterred by the complexity of the market.

The CAB has called on the Financial Conduct Authority (FCA) to tackle the problem, saying it should require lenders to improve the content, timing and format of existing prompts to switch mortgage deals. 

To me both of these stories aren’t about who owns the client – it is about the fact borrowers, savers and advisers aren’t being rewarded for their loyalty.

Nobody owns the client but what everyone in financial services should respect is the fact what EVERY client wanted when they first engaged with this industry was the best deal available to them.

That deal is available through a financial adviser.

This is what providers should flag – anything else just isn’t treating those clients fairly.

emma.hughes@ft.com