I was interested to read last week’s cover feature about whether brokers should charge a fee or not (Mortgage Strategy February 7).
Why don’t lenders stop paying a proc fee and then not charge an administration fee for introduced business?
Essentially cases from brokers require minimum administration as they are provided fully packaged. In most cases the application has been keyed directly on to the lender’s systems, so the broker can charge the administration fee and the lender saves on the proc fee.
This way the client gets proper service without being ripped off on fees. I have never understood how lenders can charge an administration fee on intermediary business where their level of administration and overall cost is clearly less than on a direct deal.
So give the client the option – pay £499 and go direct to the lender with no advice, or pay £999 to the adviser and obtain advice.
In this scenario the lender is no worse off as it is not paying proc fees. And the client gets the choice to save on fees if they feel they do not require advice.
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