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Letters: Others get paid to work – so why not brokers?

Others get paid to work – so why not brokers?
The mortgage broking world must be nearly unique in terms of how advisers are remunerated.

There are not many industries where you effectively work for free yet those who do not have the safety net of a corporate entity behind them, paying salaries month in and month out, do this on a frequent basis. What is more, in today’s economic climate where compliance is rigid and time-consuming, you now have the luxury and privilege of working longer and harder for the wondrous prospect of no financial gain.

In what other industry can you spend days liaising with clients, researching the market for the most suitable product and dealing with all parties concerned, only for it all to fall over and you end up not being paid? Yet for a broker, procuration fees are king and, if the deal does not complete, there is no remuneration at the end.

Accountants and solicitors get paid for doing their job so why is it not certain that a broker will be paid for doing theirs?

Innumerable factors can lead to a case falling through and, since the MMR, the whole process is more complicated and takes longer.

Brokers are an increasingly important part of the market. So if the job is done as agreed the broker should get paid a fair fee, irrespective of what else transpires in the deal process itself. Likewise, when human nature’s best friend – ‘I changed my mind’ – rears its head, this should not be to the detriment of the professional acting in good faith. This is why it is not only right but fair for brokers to charge fees.

Most people do not work for no pay. So when your broker charges a fee, perhaps try to understand the reason for it: the value they add, the time they save you and the fact that their expertise and professionalism are worth it.
Paul Smulovitch, Integral Private Finance Services

Chancellor’s dangerous game with stamp duty…
George Osborne’s decision to hike stamp duty on homes for buy-to-let is interesting.

How will it work for cash buyers who buy a home as a main residence for a few weeks and then let it out at a later date, possibly then taking a consumer buy-to-let remortgage further down the line?

All this will do is either hinder the landlord who needs a mortgage to purchase a buy-to-let in the first place or push the back-door buy-to-let market even further into the realms.

While the competitive edge remains with landlords and buy-to-let, I suspect the Chancellor is playing a dangerous game with the housing and mortgage markets with this and other recent measures.
Chris Hulme, Clayton Hulme

…will hinder, not help, the housing market
When will the Government realise that, if people could afford to buy a home, they would be doing it?

After this change to stamp duty, landlords will think twice before buying, thus creating a shortage of rental accommodation. Where will everyone live? Council houses? Oh no, there is a shortage of those as well.

Where are the incentives to help first- and second-time buyers purchase a second-hand property? This looks set to slow down the housing market and reduce the income coming in via stamp duty because landlords will simply stop buying.
Nigel Allen

Choosing a network requires due diligence
I agreed with Broker Conveyancing’s Harpal Singh in his previous column when he urged brokers to check what networks were offering before signing up.

Anybody choosing to join a network should perform considerable due diligence.

You do not want to find it goes belly up, leaving you with no source of income.

You also want to know what your liability will be in the event of a complaint. Who pays the FOS fee? Will you be expected to pay a PI excess? If so, how much is it? Will it go up in the future?

If you trade as an LLC (and you should), are you expected to provide a personal guarantee? If so, the network can pursue you for life over complaints because the FOS will not allow it a long-stop. And will the network pursue your partner (business or personal) over complaints upheld against you after your death?
Peter Turner

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  • Steven Fletcher 4th December 2015 at 4:17 pm

    There is only one person to blame for brokers not getting paid and that’s brokers. I quite agree with the article in that we need to get paid for what we do, not just on an outcome. Each client’s mortgage needs have differing challenges and time commitments and fees charged should reflect this. Equally once a client has engaged and work has been undertaken then the fee becomes payable if the application does not proceed – unless a mortgage offer is not possible to attain and then that’s down to broker knowledge and judgment – so only ourselves to blame again. As long as the fee structure is positioned at the outset I have not had a problem with most clients paying if they choose not to proceed with the application for any reason. I accept that this will not work for all clients, particularly employed clients, but for the self employed whose circumstances are rarely standard, they tend to see the value of what we do a lot more. I also accept not all clients engage, but by charging a fee, you may be less busy, but possibly also, more profitable.

  • Stuart Gregory 4th December 2015 at 4:07 pm

    Agree with Paul Smulovitch 100% on broker remuneration, but whilst we still have brokerages willing to offer their services for ‘free’ this issue isn’t going to change, nor go away. It’s not the client’s problem, it’s the mortgage industry. For every client that sees the value in what you do, there’s another who doesn’t because of ‘matey down the road’ who markets his services as better because they are ‘free’.