A broker has criticised Coventry Building Society after they could not complete a product transfer due to differing interpretations of the government mortgage charter.
The broker stated that Coventry’s system would not allow them to complete a product transfer so they called the lender for assistance.
Coventry then explained that the broker's client’s deal ends on December 31 and the lender does not allow switches until there are four months or less to go.
The broker challenged this as Coventry had signed up to the government mortgage charter which says that lenders will now allow customers to switch to interest-only or extend the term of their loan for up to six months.
In response, 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.
A spokesperson for Coventry Building Society said: "We currently allow product transfers to be booked four months in advance, and also permit customers to change the product up until the 23rd of the month before the new deal starts.
"This meets the conditions of the mortgage charter. However, given the economic backdrop, we will keep this under review and would advise borrowers to check our website for any update."
Brokers' reactions
Warners Financial Services mortgage and protection adviser, Keith Hood, said Coventry's stance was "disappointing".
“What was the point of Coventry signing up to a charter designed to help consumers at such a difficult time and then change nothing. Very poor.”
But Yellow Brick Mortgages managing director, Stephen Perkins, said he was not surprised.
He added: "The wording was 'up to six months' and not 'at least six months', which it should have been.
“Coventry is not the only lender offering their rate switches less than six months in advance, but at least they do give us plenty of notice on pending rate changes.”
Larkbridge Mortgages managing director, Lincoln Brown, agreed that Coventry Building Society is “totally within its rights” to keep its product transfer policy to four months ahead of the current product ending.
“The wording from the charter is that customers approaching the end of a fixed-rate deal will have the chance to lock in a deal up to six months ahead,” Lincoln explained.
“I’m certain not all lenders will feel a requirement to adapt their policy to six months if they believe their existing policy is fair and consistent.”
South Coast Mortgage Services director, Gareth Davies placed the blame on the broker, stating that they "should’ve realised" that Coventry had not changed to six months.
“While not ideal, I cut them a bit of slack as a lender for sticking to their 48-hour rate change rule throughout the recent turbulent market. Take it on the chin and move on,” he added.
