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MSTV: Boulger warns of two-tier broker system

In this edition of Mortgage Strategy TV we talk to Ray Boulger, senior technical director at John Charcol, about the impact of the Mortgage Market Review on brokers, the potential of a two-tier industry and the chances of higher LTVs returning.

Boulger says that the new income verification rules may exclude employees of the Financial Services Authority.

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  • Jon 23rd August 2010 at 1:26 pm

    In response to GHU – my view is that best advice is not necessarily the cheapest rate. There is a need for “Best Advice” to be defined, and somewhere amongst the definition should be something along the lines of “offering a competitive mortgage taking account of all the client’s details and requirements” – this being part of a more comprehensive definition.

  • Mortgage Broker 21st August 2010 at 9:10 pm

    Business brokers or business transfer agents are helpful in selling your business at higher prices.
    ==============================
    Mortgage Broker

  • Grey Haired Underwriter 18th August 2010 at 10:58 am

    I have read these comments with interest but I always come back to the same question. This question is based on the numerous contacts I have with intermediaries, most of which have come to a me as credit score rejects from the large lenders.

    The question is simple but I bet I would get substantially varying answers. Quite simply “is best advice the cheapest rate?”. I ask this because most brokers refer to sourcing systems as their ‘bible’ when offering best advice and most of them have always tried the (apparently) cheapest lender before they go down the list. This strikes me as weird because the cheapest lenders tend to be the ones that are most criticised on these pages. it is also amazing how many times I’ve heard that the broker has tried Santander, Halifax etc despite the fact that they knew it was unlikely that they would accept the loan. Best advice, waste of time or stupidity?

    Is offering best advice a mixture of things or is it just easier to show a Trigold list that proves that the broker has sourced the cheapest rate?

  • Jonathan Gili-Ross 17th August 2010 at 10:53 am

    I dont think proc fees should be banned, it is a fee (a discounted fee at that) for lenders to pay brokers to deal with the application and customer on their behalf.

    I DO think a consistent proc fee, say 0.5% across the board for every lender, shows the customer and the lender that the broker is impartial. IF the customer can afford to pay this 0.5% fee themselves, they can do so and have the fee passed back to them by the lender that it completes on. They can then choose any lender in the country, including “direct” products.

    BAN dual pricing, then you have a completely neutral playing field, where everyone pays each other the same and everyone can offer the same products. This then counteracts any examples of cases being placed to the highest bidders.

    Is it me or is this not the most simple solution without drawbacks, to anyone apart from the shareholders of the banks who lose their cross-selling GI sales?

  • Gordon Smith 17th August 2010 at 9:39 am

    Re Jeremy Sadler and Peter Yates.
    Firstly Jeremy,Michael Mckee’s post should be logical enough for your post to be seen for what it is,IE Dangerous for both client and Broker alike.
    Peter,I will add to yours.
    You require a level playing fiels,so presumabley your also advocating the removal of proc fees? if so your niave too.I used to work for a large high street bank as a financial adviser.Part of the team of sellers I ran included a mortgage broker.All the “sellers”including myself,the mortgage broker and rest of team had sales driven bonus,it wasn’t called bonus,it wasn’t called proc fees either,it was called points.
    It was called points because customers of the bank didnt like to think their bank adviser got paid bonus,or commission,or procs,points didnt interest customers.
    So thinking that removing procs from independent brokers to level the playing field is a good idea,think again,it simply takes a huge amount of clients away from indepenedent advice,and drives them to the limited advice and products of the banks.
    I know,I worked at one.

  • Wasim 17th August 2010 at 12:47 am

    Why is it that the greatest things happening are in the negative spectrum of life?
    FSA
    proc fee issue & dual pricing
    MMR
    Mortgage intermediaries vs lenders
    ….

    With so many complications and debates (most for the right reasons) why do we have a system that CANNOT BE SORTED.

    What matters is not what the talk is talked, but what actions have BEEN TAKEN

    Sadly, the financial sector has it’s backside prominently in the air for the bull to strike (recession/bankruptcy/business closures)
    .. and thats not anyone else’s backsides, it’s yours and mine!

    It is time not for a debate (we’ve had too much talking done it’s done nothing).

    its time for Lenders to talk to the public and lets have a national framework that works so that we brokers/intermediaries are clear for once and for all where and how we can contribute positively to the country’s industry.

  • Peter Yates 16th August 2010 at 5:22 pm

    I agree with Jeremy Sadler- let’s have a level playing field so everyone knows where they stand, especially the consumer. If proc fees are banned, so should any kind of ‘marketing incentives’. It’s so simple, it might even reduce regulating costs (wishful thinking..).

  • Michael McKee 16th August 2010 at 5:21 pm

    Yes Jeremy, the poor borrower is usually already ‘mortgaging to the hilt’ and is likely to be unable to pay a reasonable fee to get advice, thus throwing themselves into the arms if the lender. I have found that unless the relationship between fees & interest rates is pointed out, they do not make the connecton and would end up paying more. What people forget is that we only get paid for ‘procuring’ business for the lenders. They don’t pay us a retainer, pension, car allowance, light, heat, power or salary. We do all the work, explain the products, obtain references/ proof of income etc and package the finished application. We are a cheap way of them doing business but they have eyes on the general insurances.
    If we can’t save the public from them, the banks will have a field day, with dearer mortgages and insurance premiums because we won’t be there promoting competition.

  • David Jones 16th August 2010 at 4:29 pm

    More ramblings….

    Come on Mortgage Strategy, take your camera to another brokers for once…there is life outside of John Charcols!

    ‘guaranteed job security’…..?

    let me know where I sign up! if RB knows where this is to be found he hopefully has shared it with (ex)colleagues.

  • Jeremy Sadler 16th August 2010 at 4:20 pm

    Is Boulger making the assumption that an ex bust company like Charcol can be trusted ? Why not try this FSA

    1) Ban proc fees
    2) Ban dual pricing

    customer then has 2 choices

    1) do own research and apply to a lender

    2) pay a professional fee for an independent service

  • Carl Higgins 16th August 2010 at 4:19 pm

    Interesting message from Ray…It is surely unsustainable to have a regulator working against central government policy. The over zealous activity of this misguided regulator will undermine the economy, house prices and every household budget through this idiotic socialist thinking