The government's mortgage charter "provides a good PR headline" but "lacks detail and substance", one broker has claimed.
In response to questions concerning confusion around the charter, Yellow Brick Mortgages managing director, Stephen Perkins, explained: “Like all government initiatives and policies, it provides a good PR headline but lacks the detail and substance to make any real difference."
The comments follows confusion over the wording of the mortgage charter, specifically what it means for customers approaching the end of a fixed rate deal who have the chance to lock in a deal "up to" six months before.
This has led to different lenders adopting different approaches, with Santander and Halifax, among others, offering six months whilst other lenders including Virgin Money, are only offering four months to lock in a deal.
This inconsistency has recently caused confusion for brokers over Coventry Building Society's interpretation of the charter.
Coventry explained to one broker that their client’s deal ends on December 31 but the lender does not allow switches until there are four months or less to go.
Coventry explained that the charter states “within six months” and that it interpreted that to mean anytime up to six months, thereby including its current four month rule.
Perkins added: "The product transfer timelines are vague and have been left open to interpretation.
"While it stated up to six months, those offering four months are not outside the policy but perhaps not being as helpful to their clients as they could be."
He added that, if every lender offered product transfers and remortgage offers six months before completion, homeowners can plan with certainty and still have the flexibility to change if, over the six months, rates improve.
Barnsdale Financial Management financial adviser, Scott Taylor-Barr, also shared his concern: “This is unfortunately what happens when things are rushed through without proper consultation with market participants; things like this get missed and cause issues."
He added that normally, when a change of rules is proposed, a consultation document is issued to the key players in the market and views and opinions are gathered before making final rules.
Taylor-Barr explained this process allows potential problems such as the above to be spotted and resolved.
"Trade bodies, such as AMI, spend a huge amount of time and resources going over this sort of thing and challenging around points just like this one."
Taylor-Barr explained that this means when final rules are released, they are more likely to be consistent and less likely to contain issues around wording.
tom.dunstan@ft.com
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