To fee or not to fee, that is the question. As a broker, the fee I charge clients is an almost daily dilemma for me. I am torn.
My firm has a policy of charging a fee for mortgage work. This fee is payable on completion and the amount charged depends on how much we are receiving from the lender as a proc fee, whether we are earning from other associated business such as life cover and how complex we foresee the case as being at the outset.
This last criterion can cause us to shoot ourselves in the foot because applications often turn out to be more complicated than they look at first. But in my mind there is also an intangible factor and that concerns the circumstances of the client.
I know that my firm is not a charity and I need to earn a living. But I often meet clients who are in straightened circumstances. They may be consolidating debt or they may be elderly clients using equity release to pay for simple everyday necessities such as central heating. So my fee dilemma is exacerbated by my conscience.
I cannot in all conscience charge a struggling client a whopping great fee so I tend to charge such clients a fee that allows me to sleep at night even though I know I am restricting my own income by so doing. I also know that there are other brokers in the market who do not have similar qualms.
And lenders too, it seems, have few moral issues similar to mine. Rates with arrangement fees of 1,500 and above are pretty common these days. I realise that in offering the low rates that these are usually attached to, lenders have to charge such fees to make even a small profit on the deals concerned. But wouldn’t it be more honest to customers if the rates somehow incorporated all of the costs involved?
All this and I haven’t even mentioned the dreaded deeds release fee which, in my opinion, is charging via the back door.
A couple of weeks ago I was delighted to read that the world has begun to wake up to one of my hobbyhorses, Northern Rock’s iniquitous valuation fee scale. This has an amount added to the valuation fee for the work that Northern Rock’s staff have to do in instructing and assessing a valuation report. This is outrageous.
I urge brokers to make a fuss about it with their BDMs, feeding back that they will only use Northern Rock if there is no alternative as long as it continues to charge this extra amount. How can this possibly be treating anyone fairly?
But moving on – oh happy days, as I have just heard the news about Alistair Darling’s proposals to regulate estate agents. Not sure of the details yet but regular readers will know that this is one of my other hobbyhorses. It’s high time estate agents were answerable for some of their methods and practices.
I know it’s unfair to tar them all with the same brush – many of them are honest and professional about their business – but I for one am looking forward to hearing more from Darling soon. And I never thought I’d hear myself saying that.