Brokers have refuted claims they overcharge customers by charging them a fee while also taking a commission from lenders.
The issue has been thrust back into the spotlight by One 77 Mortgages, which yesterday said borrowers are wasting £370m a year on unnecessary mortgage advice fee to brokers.
One 77 Mortgages managing director Alastair McKee says consumers throw away a “colossal sum of money” on fees each year by brokers “double-dipping”.
The Chippenham-based adviser takes a procuration fee from lenders but does not charge clients a fee.
The ‘no-fee’ model is not the norm but is also used by firms including the country’s largest broker, London & Country.
South Coast Mortgage Services director Gareth Davies says: “Fees are justified and they’re commonplace.
“As long as they’re clear, fair and not misleading and communicated from the outset then I think clients are happy.”
Davies’ firm charges a flat fee to customers, which he says is vital to staying profitable.
He adds: “Procuration fees haven’t really increased in the past seven or eight years but, because of regulation changes, the administration and time involved in getting a mortgage through has probably trebled in that time.
“The job of mortgage advisers goes far beyond just finding the best rate and, at the end of the day, we are a business and we need to make money.”
But McKee argues that taking both fees is ‘shocking’. He says advisers ‘being paid twice for doing the same work is simply unjustifiable’.
White Financial Services managing director Dan White says the debate about charging a fee is one which has been going on for years.
He adds that charging both fees is important and justified.
He says: “You pay a solicitor or an accountant to do work, a mortgage is the same. We get a commission from a lender because we are doing the admin work for them. And we get a fee from the client because they have come to us for professional advice.”