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Letters of the month

MS-LettersLETTER OF THE MONTH: Backlash against accusation of brokers’ ‘double-dipping’

Clients have choices — and that’s key. What isn’t helpful is viewpoints that are aired where brokers who do charge are described as “ripping off the client”.

First, this isn’t true, because all fees are agreed upon with a client prior to commencement of the work. Second, it shows more than anything how you value your own time if you think all clients want your services for ‘free’. That’s not the case in most circumstances. What they want is value.

I’ll give you an example. A company director came to our company after being unhappy with the potential loan amounts offered by a ‘free’ broker. One meeting later and we identified lenders who would look at their incomes differently — and got them over £80,000 more, which enabled them to move to their ideal home, something they thought wasn’t possible.

‘Free’ doesn’t always mean ‘better’.

It all depends on the level of service you are providing to your client and the complexity involved in the process doesn’t it? You get what you pay for… If you’re also working with much higher loan amounts then proc fees based on percentages may well work.

I believe that, as a general rule, fees can also help avoid commission bias and minimise the risk of add-on sales being forced upon clients to make up any shortfall in income – something this industry has had levied at it for some time.

If Mr McKee is happy to take a £300 proc fee alone for all the work needed on a £100k loan at 95 per cent LTV for a self-employed client with one year’s accounts, then good luck to him.

I can’t see him driving across the county for a face-to-face client meeting in their own home or office for that reward.

Brokers have their say on the difficulties they face when attempting to leave networks

I think the point here is, as stated, the networks are very good at giving you the highlights but not what the divorce will look like if you decide to leave.

When I was with my previous network, they had actively promoted a move from one month exit notice to three month exit as a positive [because] if they had to increase fees we always had three months notice their side. I think the advantage was one-sided. To state that a freeze of income immediately is necessary to validate possible bad advice is nonsense. If the correct checks, measures and span of control means they are happy when you are with them shouldn’t diminish the advice when you decide you no longer wish to be.

The FCA needs to review this whole position and generate a transparent process for all networks on all charges including top slicing, mortgage club shares and the process to enter and exit so we can make the correct informed choice of who we wish to partner with. It is about time that the networks look to treat their customers (the appointed representatives) fairly, as we do with our clients.

Your network may want your files back in case they have a complaint but if they then lose it and have to uphold there are no prizes for guessing whose record it goes on to – or who pays the PI excess.

Make sure your client agreement allows you to hang on to copies of client files forever and do hang on to them.

Networks are always going to say ‘we are the good guys, we gave them a contract to read and sign and only an idiot would sign it without reading it’, which is basically what they are saying here. They don’t really care whether ARs read it or not; it will be used against them when the time is right.

However, during the recruitment process, they are happy to give you proc fee lists, protection commission lists, general insurance commissions list and anything that paints them in a good light. It is only after you decide ‘this is the network for me’ that you then get passed to their admin department to complete the process [and] you will get an email with 10 documents that need to be read, signed and returned. By this point you have already made up your mind so when you come across negative points in the paperwork you are more likely to overlook them.

Surely these documents are the most important and should be presented to ARs upfront before you even think about commission? After all, they all expect their ARs to present products to clients and explain both the positives and negatives and only ask them to sign documents when they have a full understanding of what they are signing and agreeing to.

As far as I am concerned they do not practise what they preach. There is no network that is telling ARs what their PI excess is, how it works and when it will be applied. It is like drawing teeth getting this information and even in face-to-face meetings when you ask the question they tell you ‘Oh that’s a really good question, no one has ever asked that before, I will need to get back to you [on] that.’

Why is there such a fear of being open and honest? If there is a PI excess of £5,000 we just need to make a decision on it, but surprising you with it when you get your first complaint is unacceptable.

Support for FCA’s ‘occasional paper’ with guidelines on older borrowers

The situation regarding the [lack] of products and lenders, who accommodate older borrowers, has been around for far too long.

If lifetime lenders are prepared to allow a mortgage to be discharged on second death, why not traditional lenders? With many people aged 60 and over retiring with large pensions, why should these people have a cut off age? Being prudent and perhaps ensuring that in a joint borrowers case, the income in first death supports the mortgage, why does a maximum age at expiry exist?

Although some of the bigger lenders have improved in this area, I personally think there is a long way to go and I am glad that the FCA are on to it.

It will be interesting to see how ‘vulnerable clients’ will be accommodated, changing financial situations accommodated, and so on. Let’s face it. there is no chance that a funder will be able to design a product that can take a person from being a first-time buyer to when they are beyond retirement age.

What is needed is a greater appreciation of the solutions that can be provided by different providers, with advise from the suitably qualified and knowledgeable advisers working in conjunctions with other specialists.

There needs to be greater co-operation between the financial adviser, lending adviser, legal adviser, care adviser, etc. Each adviser should contribute to the discussion, much in the way that a GP will work with the chemist, optician, chiropodist, hospital, etc.



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