From David Finlay
Having read the letter from Nigel Pamment (Mortgage Strategy August 21), I feel duty bound to point out that Woolwich was one of the first high street lenders to offer brokers proc fees for retained business. We wanted then – as we do now – to ensure brokers are rewarded for helping us retain clients.
Pamment is correct in that we write to customers a number of weeks before their products mature. This letter is service-led and allows customers to choose from up to three products. It also includes our latest new business rates.
We believe that by sending letters when we do we are treating our customers fairly by giving them plenty of notice that their deal is coming to an end. They have time to consider, consult their adviser and choose their next product.
Pamment asks what happens if rates change. Our mailings state that if clients requests a rate then change their mind, there will be an early repayment charge penalty.
But it can often be in a client’s interest to choose a rate early. Recently, customers who took a new rate three months early received a better rate than those who chose to wait and take a rate nearer maturity.
There is no truth in the inference that it is our intention to cut out brokers. They will be paid proc fees on products that appear in mailings – they just need to submit an intermediary’s details form along with the customer’s deed of variation and request to change mortgage form.
The response from brokers has been overwhelmingly positive.
By emailFrom Ron Radway
I am responding to a letter in a recent issue of Mortgage Strategy (August 14) regarding the Financial Services Authority providing value for money. I am a regular reader of the letters pages and have noticed a recurring theme since Mortgage Day – some individuals seem to think that the FSA and the government are out to get them personally.
I have a different view on this. I believe the mortgage industry is blessed in the way that it is possible to run a successful business, whether it be a one-man band or a small to medium-sized brokerage.
Us brokers have an almost inexhaustible supply of potential mortgage or remortgage clients and a vast array of products to offer them. We don’t need to carry stock on our shelves and the mortgage and insurance products that we sell are designed by someone else and delivered to consumers by lenders.
In his letter, your correspondent states that for a business with a turnover of 50,000, his costs are approaching 10%. That is a brilliant business model as the gross profit is 90%. We should keep this quiet or we will be flooded with people from other industries where gross profits of 25% to 30% are the norm.
All we have to do is stay informed about what products are available via one of the inexpensive and generally excellent sourcing software engines, speak with clients and then help them decide which product is best. We get paid a commission on most mortgage and associated life and general insurance products sold and we can and should charge a fee for the work involved in processing applications and sending them to lenders. At the end of each six or 12-month period we have to report to the regulator.
The FSA does not need to offer value for money as it is a government body, not a commercial organisation. This brings me to my point. Your correspondent stated that he had just spent 400 with his accountant and then a day preparing the rest of the information – say, another 200 to 300 of potentially chargeable time for a one-man band.
If he was to take the same action as I did for my business 18 months ago and install MortgageStream case management and reporting software that costs me about 20 per month per user, he would be able to import data from his sourcing software with a single click, case manage and track the application process, scan in documents and produce Retail Mediation Activities Return reports in 20 minutes.
MortgageStream also does my mortgage and life commission accounts for me, reducing or avoiding accountancy fees.
The regulator and the government are not our enemies. The lack of proper case management software and a reliance on 20th century paper files in metal filing cabinets is the problem.
One Call Financial Advice Centre