A recent question about product transfer on mortgages to IFAC prompted a full response… This has been a topical issue since product transfers have become increasingly attractive. This is where the borrower just moves from one product to another without changing mortgage provider. Many providers pay procuration fees for this work.
For the product transfer, the FCA stated at an FCA Round table in February this year that they would expect to see a “full advice process”, however, a lot depends on the client situation, ie, whether they are:
1. Your existing clients.
2. Whether they have just come to you and asked you to facilitate the transaction, and are not known to you.
• Ideally, either a new fact find, or update the existing as appropriate, and obtain a signature.
• From here it depends whether the client simply wants to take out a product transfer to avoid hassle, in which case, you can research existing lender products, and then issue a short Suitability report explaining what you have done and why. This should include the fact that that you have, on this occasion not offered a full advice process, but simply facilitated a product transfer, at the client request, and that there could “potentially”, have been better products available.
• Alternatively, if the client needs full advice to determine whether a product transfer is best, then you conduct a full process / research etc.
• Offer full advice, complete a basic fact find, and then restrict research to existing lender, document why, and issue a report accordingly.
Some networks offer their advisers a “disclaimer” for their clients to sign, which again you can adopt depending on circumstances.