Using few lenders doesn’t mean giving limited advice

From Dave King

Ray Boulger is as distanced from the real world as I always suspected if he really thinks independent brokers are giving limited advice due to not using a large number of lenders (Mortgage Strategy September 5).

It is only necessary to read your letters pages to see why some of us exclude certain lenders in our recommendations. Over the course of a year or so, the rises and falls of service provision, inaccessible websites, unreturned phone calls, poor administration and many other factors will reduce the usage of a particular lender.

As long as you can prove why you did not use X, Y or Z lender and your paperwork backs this up, what’s the problem?

There are two parallels to be drawn here. Firstly, let’s compare critical illness cover in the same way. There are plenty of providers of CI cover but only one or two will cover everything, be able to underwrite the client with efficiency and have them covered. So, after a year or two, we will have narrowed down the usage to the two or three best.

Why does Ray not think that this happens with mortgage lenders too?

Simplistic I admit, but it leads me to my second parallel, the 80/20 rule. If we apply the old model that 80% of business is conducted through 20% of providers, we can see the report on which Boulger’s comments is merely a reflection of a standard business model.

Should we give business to an certain lender merely to bring figures up? I don’t think that would pass muster in a suitability letter.

Panels does not formally exist however the inadequacies of some of the major lenders create a natural barrier to doing business with them.

Why should I risk the FSA’s or clients’ wrath when these lenders will still not accept responsibility for their actions and pay compensation to brokers when they foul up?

This year to date I have arranged 20 mortgages, six of which went to one lender, two each to five others and one each to four others – that’s 10 lenders in total. This is less than the 11 average in the research. But can somebody please tell me what I’ve done wrong?