IFAs raising awareness of lenders' direct deals

  • Story by: Sharon Flaherty
  • Magazine: FTAdviser
  • Published Friday , July 04, 2008

An overwhelming number of independent financial advisers (IFAs) believe they should mention direct deals to their clients, even if it means missing out on a sale.

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Since the credit crunch began last year, many advisers have noted that the practice of dual-pricing (where mortgage lenders offer customers better deals through their branches than those available through mortgage intermediaries) has increased.

On the latest FTAdviser.com poll, advisers voiced their opinions on whether they should make their customers aware of direct deals or not.

Sixty per cent of the respondents said that advisers should make their customers aware of direct deals available in the market if it better served their needs.

Only forty per cent said they did not feel obliged to, especially since the Financial Services Authority (FSA) confirmed its stance on it. (Read article.)

Last month the FSA said that it did not expect firms to recommend lenders or particular products they do not have access to, especially in the current market conditions.

However, by not sourcing deals from the whole of market, advisers are wary that they may not be able to source the best product available. This raises the question of whether such practice would meet the FSA's standard of treating customers fairly (TCF).

Commenting, director general of the Association of Mortgage Intermediaries, Chris Cummings, said: "Any good intermediary would be talking to their client about how difficult the mortgage market is now.

"That will help prepare them for any difficulties faced in placing a mortgage, and it will confirm them, in the client's eyes, as someone on their side and a professional.

"Clients are aware of the market's travails and that is why the proportion seeking advice has increased.

"As we agreed with FSA, no intermediary is expected to tell their client about a particular direct deal. If their firm works on a fee-basis there may be other options that could be explored.

"Firms should visit the AMI website for copies of the good practice note dealing with these points."

* To have your say on the latest FTAdviser.com poll, visit the homepage and scroll down. The poll is found on the righhand side of the page.