Industry brokers have called for clear, industry-standard notice periods, following a rate change from TSB Bank that appeared to give them 25 minutes’ notice.
On 7th March 2023, TSB informed brokers that rates would be raised by as much as 0.20% at 13.00.
The announcement was made at 12.35, giving brokers less than half an hour in order to act on the information.
Various market sources voiced their disagreement with the action at the time, pointing to a wider problem whereby, particularly during Q3 2022, many lenders changed or withdrew products at short notice to reflect turbulent market conditions.
TSB made an announcement on Friday 10 March that it would in fact give brokers until close of business today (13th March) to take the necessary steps to process applications ahead of the change.
However, the events led many to call for a standardised industry approach, similar to that of lenders such as Coventry Building Society, which has committed to giving at least 48 hours notice.
Sources cited the upcoming introduction of new Consumer Duty rules by the Financial Conduct Authority (FCA), as a reason why this standard should be introduced.
Craig Fish, director at Lodestone Mortgages & Protection, said: “Whilst I appreciate that lenders do sometimes need to make quick decisions in a fast-moving market, if the likes of Coventry Building Society can always manage to give 48 hours’ notice, I fail to see why others can’t.
“I think an industry standard should be mandatory, as this would at least enable brokers to manage clients’ expectations and our diaries.
“Furthermore, this does highlight the importance of educating our clients to provide all relevant documentation when requested, rather than delay for days and then be disappointed when a rate has been withdrawn.”
James Vince, managing director at Castle View Finance, explained that TSB was not alone in making short-notice changes to product ranges, and that many lenders have made similar moves recently.
He said: “After a short period of stability, it is still a shame that lenders cannot come to an industry standard to ensure clients can have the best chance of advice and recommendation.
“We see this in great effects in the specialist product ranges from lenders, where unregulated business can change quickly and inconsistently.
“With the likes of Coventry Building Society giving brokers a set period of notification, allowing business to be submitted and concluded in good time, it feels like a breath of fresh air in comparison.”
Lewis Shaw, owner and mortgage broker at Riverside Mortgages, said that, while the short notice periods were frustrating, market players should accept that lenders must make quick decisions based on emerging data.
He said: “Lenders are commercial entities, and they’re entitled to do as they please. Yes, it sometimes makes our lives as brokers challenging, but it’s not a massive problem.
“The standout lenders that always give reasonable notice are Coventry Building Society, Halifax and Accord.
“However, the real lesson here is about explaining to clients the importance of getting all their documents to us when we ask for them in the correct format.”
Joe Stallard, director and adviser at House and Holiday Home Mortgages, agreed: “A client should never feel rushed into a decision, but they do need to understand that the mortgage market is constantly moving and rates cannot be secured until they give the go-ahead.
“With lenders having different funding models, I don’t think an industry-wide notice period is ever something we’ll see, so instead we should control the things we can control and ensure our processes are up to scratch.”
Thomas Collier, advising director at Advantage Financial Solutions, added: “We have to remember that lenders don’t like giving short notice periods. They don’t do it for fun.
“It’s also important to consider how lenders are funded. It’s considerably easier for a building society to give a good notice period than it is for a small tranche-funded lender that must react very quickly to the movements in the market that funds them.
“That said, it’s deeply frustrating when some large banks give too little notice, this harks of a communication breakdown within the bank more often than not.
“Some lenders are notorious for mispricing their products, I have pretty much come to expect crazy withdrawal notice periods from a select few.”
