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Govt enquiry into lender product withdrawals?

ended 31. May 2023

A Newspage broker is pencilled in for a slot on Sky News at lunchtime today talking about mortgage rate withdrawals. He says he is going to call for a Government enquiry into the way in which lenders can pull products with little, if any, notice. What are your thoughts on this? Should the Govt look into this? Is this practice TCF and does it align with Consumer Duty? Should there be a minimum withdrawal time period? If so, of what? 48 hours?

7 responses from the Newspage community

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Jonathan Burridge
Founding Adviser at We Are Money
Oh please, stop this nonsense. It is inconvenient that rates change frequently and fast and that is another reason why customers need advisers. Yes, it can mean that a borrower may miss out on a rate, but lenders need to move fast in a volatile market and restricting their ability to be nimble will only be to the detriment of the client in the long term as products would be priced to absorb some uncertainty rather than cut to the bone to be competitive.
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Joe Stallard
Director and Advisor at House and Holiday Home Mortgages
Sudden mortgage rate withdrawals are challenging to say the least. But while it would be ideal to have more notice, I understand the importance of lenders' profitability. We all know the powerful undertow unpredictable circumstances have on everything, and the need to respond to economic riptides with swift, decisive action. And this can make longer notice periods difficult. However, the crunchy bit is that lenders should always prioritise fairness and transparency to protect consumers. This means clear communication and proper disclosure of withdrawal policies. While a government inquiry could provide insights, we've got to find the sweet spot between consumer protection and maintaining lenders' viability. And it's worth pointing out that brokers are trained to navigate through times when things are changing faster than particles in the CERN accelerator, playing a valuable role in guiding borrowers through these complexities.
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Craig Fish
Director at Lodestone Mortgages
Lenders are businesses and sometimes do need to make quick commercial decisions when it comes to the products that they offer. However, I fail to see why some lenders can give 48 hours notice to brokers and others simply don't, giving sometimes little or no notice at all. Without any doubt, those who give no notice would not comply with consumer duty, and the practice is not TCF. I agree that there should be an enquiry into lenders' practices, and it should be compulsory to give an absolute minimum of 48 hours' notice. Ultimately, if we fail to secure a product for a client, we are seen by the client to be the one at fault, despite in many cases being unable to meet these ridiculous deadlines. All of us, lenders included, carefully monitor market conditions, and in most cases, see these changes coming, so I fail to see how some have to make snap decisions and withdraw products when others can give notice.
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Riz Malik
Independent Financial Adviser at R3 Wealth
Our call for a wider government-conducted investigation into the mortgage market cannot be stressed enough. The current situation, where mortgage pricing is so vulnerable to market fluctuations that we cannot be assured of a 24/48-hour notice period, indicates an underlying issue. It's high time we address these concerns and establish a more predictable and transparent system for consumers.
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Christopher Hall
Director at Mortgage Guardian
Whilst it would be nice to have adequate notice periods, it is quite obvious that lenders are reacting to market conditions. Mortgage lenders are businesses that must make complex commercial decisions quickly otherwise they become loss-making businesses. It is a case of lenders having to adapt to an ever-changing environment in order to survive so that they can continue to provide mortgage products to consumers and businesses.
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Adam Smith
Founder at Alfa Mortgages
In the interests of TCF, there should really be a standardised minimum time period set for product withdrawals. That way, brokers and clients have reasonable time to get their ducks in a row.
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Anil Mistry
Director and Mortgage Broker at RNR Mortgage Solutions
The Financial Conduct Authority (FCA) should establish requirements for lenders to provide brokers with a 48-hour notice prior to withdrawing their products. This measure is crucial considering the demanding nature of brokers' work. For instance, it is common for brokers to recommend a product to a client in the morning with the intention of submitting the application later in the day. However, given the current market conditions, there is a risk that the product could be withdrawn before the application is submitted. This not only burdens firms and brokers with additional work but also negatively impacts the broker's reputation in front of the client. Lenders should learn from the practices of Coventry Building Society and adopt a policy of giving brokers a minimum of 48 working hours' notice before withdrawing products.