Little did I know last month when I talked about the importance of customer contact that advice on protecting families’ standard would take such a level of importance now that the realities of illness have sadly impacted so many peoples lives in the UK. In light of the current crisis, the advice is so crucial for our customers, and we need to remind ourselves of the definitions between direct mortgage broking and true advising.
As we continue to negotiate the challenging economic climate, there is another opportunity for advisers to offer their customers the kind of after-sales service which is the mark that will separate the ‘order takers’ from true mortgage advisers. I believe that all mortgage advisers have a duty of care to be in touch with customers during this period. We actively encourage our members to talk with customers or at the very least communicate by email or another method.
It’s at this time, whatever their circumstances that customers need to know their options. Whether it’s because they are faced with being furloughed at work and now have a temporarily reduced income, or self-employed and falling through the cracks for government assistance, a supportive conversation can help. A conversation today, we think will lead to a customer for life.
If we wish to maintain or boost a relationship with an existing customer with a view to new business down the line, there is an imperative here to see if those customers need some guidance over whether they apply for the government-backed deferment scheme, AKA ‘payment holiday’, and whether it is the right decision for their particular circumstances.
Our first concern was the customer understanding of the phrase ‘payment holiday’ and what borrowers would interpret it to mean. A holiday suggests time off, but in reality, in this case, it just means that when a lender agrees to suspend payments, interest still accrues on the whole mortgage balance including the payments that were not made. It does not mean that payments and interest are waived.
Therefore, who better than advisers to talk to their customers about those options and what would work best for them? Reducing payments perhaps or moving to interest-only for a period, rather than full-on deferment, or waiting until the facility is really necessary?
The second concern is the ‘payment holiday’ scenario is whether misinterpretation leads a stopped direct debit and damage to borrowers’ credit scores. For those who apply formally to their lenders, the understanding is that credit scores will be unaffected but what about credit profiles for those that didn’t need a holiday but took one anyway?
In short, advisers should be contacting all of their mortgage customers. If we consider them to be ‘our’ customers, we need to be on the phone to them now. If we don’t and are just passing the buck to lenders, we can’t then be surprised that when the dust settles, those customers look elsewhere for their advice. Ultimately the job is about advice, just because every call today isn’t about arranging a mortgage doesn’t mean you aren’t working. By being proactive at a time of crisis demonstrates the true value of advice and advisers.