Star letter: Life/pension advisers have a log in their eye
Last week, Mortgage Strategy reported that the FCA had ruled there was no evidence of commission bias in the mortgage market and, therefore, it was not considering a ban on proc fees in its upcoming market reviews.
Then this magazine reported that life and pensions advisers thought the regulator’s stance was “inconsistent”, given that it had banned commission as part of the Retail Distribution Review.
But Ami chairman Pat Bunton was absolutely correct: the difference in proc fees paid by lenders is negligible and I do not believe commission bias exists for one minute.
The comments made by the two investment and pension advisers were absolute nonsense and they clearly do not understand the first thing about the mortgage market. The challenge when considering where to place a mortgage is about criteria, rates and other terms; proc fees simply do not come into it.
I could not even tell you who pays what without looking it up and I doubt many mortgage brokers could – it is simply not a consideration.
I do not normally bother commenting on these articles but the remarks from the two advisers are, frankly, insulting and a bit rich from a sector that had the RDR imposed on it due to the huge variations in commission being paid and the abuses that stemmed from it – 5 per cent or more on investment bonds yet 3 per cent on Oeics?
I sold investment and pension products for 20 years and unfortunately have seen endless sales that were clearly based on what the adviser was being paid rather than on best advice for the client – hence that sector had to have change forced upon it.
The regulator is correct in this instance in that there is little evidence of bias. I would say pretty much none.
If it ain’t broke, don’t fix it
I agree with Pat Bunton as there is little difference between the procuration fees paid by the lenders. One of the lowest is the Halifax but that does not stop us recommending them.
The amount of business they receive from the broker fraternity is absolutely massive so the figures speak for themselves.
As the saying goes: “If it ain’t broke, don’t fix it.” The discrepancies in the commission structure for IFAs did need to be fixed. I agree that it might have been better if the regulators had put pressure on the product providers to bring their commissions in line with each other but that was never going to happen.
Who to believe on house price trends?
I cannot help but chuckle when I read lenders’ reports on house prices and they state these as facts.
We only need to go back to early August when Halifax reported that house prices were down but Nationwide said they were up month-on-month.
Only two weeks ago, Nationwide reported that annual house price growth had slowed to 3.2 per cent yet Halifax had it improving to 9 per cent. Looking at the August report from Academetrics with LSL, Nationwide is nearer the mark than Halifax with annual growth at 3.7 per cent. Its September report has just landed and puts annual growth at 4.1 per cent.
Of course, the summer anomalies can play a part as can lender appetite and mortgage pricing but it is good to see the longer-term reports showing steady growth again across more regions.
I wonder whether we could see Halifax having more lenience on valuations? It certainly seems to have a higher expectation of property values.
Chris Hulme, Clayton Hulme
Retired people need more options
It was very interesting to see Linda Woodall state that equity release “is a product that has a place but anyone considering such a move should do so advisedly because it can be expensive”. I wholeheartedly agree with his comment.
But what are the options for someone seeking mortgage finance beyond a certain age and once they have retired? Most lenders are still putting an age restriction on the end date of their mortgage.
I can understand that when it comes to using earned income but have no idea why such restrictions exist when pension income is considered. Some lenders suggest they have this restriction due to regulatory pressures, yet the regulator suggests otherwise.
I am sure the equity release market would contract if lenders did remove the upper age limit but it would give retired people more options and also access to lower rates and cheaper fees.