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Martin Lewis lambasts lenders for direct deals

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MARTIN LEWIS: BROKER VALUE STRESSED

Martin Lewis, founder of MoneySavingExpert, has hit out at lenders’ for trying to cut out brokers by offering direct-only deals.

Speaking to Mortgage Strategy, Lewis argues that the rise of direct deals has forced brokers to change their commercial models.

He says: “The broker business model is changing because mortgage lenders are trying to cut brokers out of the market by offering direct deals.”

He adds: “I am very much against that trend because I think good mortgage brokers are valuable. It means that they are going to have to change their commercial models, especially the smaller ones.”

Lewis says he doesn’t think the number of direct deals is down to a “collective conspiracy theory” by all lenders. But he doubts lenders are doing much to protect brokers.

He says: “Their margins are better on direct deals. This is because they sell them through their own staff and do it their way.

“To go as far as to say they are deliberately trying to kill brokers is probably a step too far but I don’t think an increasing number of direct deals is a good idea and I don’t like it.”

The Financial Services Authority says exactly half of all mortgages came from intermediaries in 2010, down from 60% in Q1 2008.

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  • GMS 8th February 2011 at 11:41 am

    Martin Lewis is a hypocrite of the highest order. His mortgage tips include speaking to a Whole of Market broker, gathering all information whilst paying no fee and then applying direct to the lender.
    His site forum boards are littered with people claiming to have been given poor mortgage advice, depsite having followed the rules of Martin and applied directly on a non advised basis.
    Many people have been left with inappropriate mortgages thanks to his do not pay for advice approach, which will end up costing them far more than a modest fee to a broker for good advice which could have saved money for the clients.
    Thousands of his disciples were also left with defaults and CCJs due to banks closing accounts and demanding repayments of overdrafts following his failed crusade to take on the banks for their unfair charges, ironically taking these people away from the mainstream mortgage market and in to the hands of the brokers he so much advises against using!!

  • Tom Cleary 8th February 2011 at 11:06 am

    Has any one individual personally benefitted more from the Credit Crunch that Martin Lewis? He must have made an absolute fortune in the last three years! And Good Luck to him. I have saved a fortune in Pizza Express thanks to his vouchers!

  • C. Macdonald 7th February 2011 at 10:22 pm

    Well this is all great from the man who’s own website, says do not pay brokers for their work. lets all do it for charity and not earn a living!!
    If he were actually to come out and say paying a broker a fee is fair, then a lot of people out there would pay a fee and I feel that personally he his an hypocrite for this article

  • Sam Jones 7th February 2011 at 5:57 pm

    It seems that people often forget that lenders run businesses too. If they can offer a cheaper deal to the customer by utilising their direct channels, then that can only be a good thing. Why should they pay a broker & charge more to the end customer & lose market share -would any of us hand-on-heart do that on their position?
    Good brokers will hunt down good direct deals and charge for their time in sourcing and their advice on payment method, term etc and from cross-sales. Yes brokers have been a good source of business for lenders, but they’re in a different economic market now, with regulatory pressure to lend effectively, at low cost and responsibly – and I’m guessing they can’t do that if they have to factor in a payment to a broker while their own (highly paid) distribution channel sits idol.