Sometimes in life, things that you believe are dead and buried make a return. Things like vinyl records or ’90s fashion end up finding a new generation and having a welcome resurgence.
Of course, in the mortgage market we find that some returns are not so welcome, and indeed are not just entirely baffling, but totally out of keeping with the environment that we are all supposed to be contributing, and working, towards.
Which leads us to dual pricing, and NatWest’s decision to launch its 5-year fix at 3.97% direct to customers via its online-only channel, with no opportunity for advisers to access this for our clients.
To put this into context, this is the mortgage customer breakdown of NatWest as we understand it: 3% of customers go through its digital or online channel, 6% go direct via a branch, and the ‘small’ matter of 91% of customers come via advisers.
So, not only is NatWest disadvantaging those borrowers who want to go via advisers, it’s also disadvantaging those who might want to secure the mortgage via a branch.
In this age of Consumer Duty, and after a couple of decades of Treating Customers Fairly (TCF), we might have thought the days of such dual pricing policies were dead and buried, never to return, simply because they appear to flout both the rules, and the spirt of the rules. But apparently not.
Go figure. We have a lender who feels the best option for its clients is to allow 97% of its customers to only have access to a worse product, but have 91% of those – quite rightly – who want professional advice on the biggest financial outlay of their lives not to be able to secure it.
Consumers also want the protections afforded by that advice, which they can’t get by going direct to the lender, and they want to have full peace of mind about the decision they have made.
It seems utterly bizarre that we are back in this position, and we might wonder what it was felt this might achieve, and we might also wonder what the regulator is going to do about such a policy which quite clearly disadvantages those customers who want advice, and who as a result, are going to be offered an inferior and more costly NatWest product via the advisory channel.
As an industry we, of course, have been here many times before, but given we have just passed the one-year anniversary of Consumer Duty, we might not have expected to be here so soon, raging against a lending machine which has so brazenly gone against these rules and seems quite happy to have over nine out of 10 of its mortgage customers unable to access its best-priced product.
Let’s be clear here: we as advisers are not after product advantages just for our clients. We don’t want divisive exclusive-only deals which are better-priced than the lender’s direct offering; we simply want parity to allow us access to all the products in their range, not to be outside the ‘shop-front’ with our noses pressed up against the window, pining for what we can’t have.
We know the regulator is very keen on allowing consumers to choose their own route to the mortgage market, but this type of pricing policy appears to be pushing consumers down a route they may not wish to go, in order to get a cheaper rate. How can this be right?
The more you think about this, the more divisive and anti-Consumer Duty/TCF it is. Perhaps what we really need here is for the regulator to stop at source such practices that put us in such a position.
If we as a sector are supposed to be taking Consumer Duty seriously, then the FCA can start by taking action on dual pricing, and ensuring our clients do not have to make non-advice decisions – in this case with no human interaction at all – in order to access a competitively-priced product.
This might well be the first significant challenge to the Duty and what it is supposed to be delivering for customers – let’s hope we have a regulator that doesn’t shirk it. In the meantime, as advisers do we need to be voting with our feet and boycotting lenders who continue to dual price?
Rory Joseph and Sebastian Murphy are group directors at JLM Mortgage Services, the mortgage and protection network
