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[MSE Lawrence]

This is the discussion to link on the back of Martin's blog. Please read the blog first, as this discussion follows it.

Read Martin's "Mortgage Brokers In Trouble: Bad News for Consumers." Blog.

Click reply to discuss below.

[steve2999202]

Hi, I am a Mortgage & Insurance Broker and have been in the industry now for nearly 14 years. In that time I have seen recessions come and go and I am still here, dealing with a smallish but quite loyal band of customers who use me because they trust that I will put their interests before my own.

This time however, things are bad; business is around 80% down for the reasons mentioned in the article. Can we survive an 80% drop in income? No.

We have been forced to look to diversify into other areas, Debt Advice for one and helping clients cut costs on their utilities and shopping bills. It's early days for these two ventures but we (husband & wife team) hope it will be more rewarding than our previous venture in Jan 2008 when I trained and qualified as a Domestic Energy Assessor (at an "investment" totaling around £30,000 on training, small car and Franchise), only for the company we purchased the franchise from to go bust and leave us holding the tab.

Will we be around in the Mortgage Market next year or the year after? Possibly, but only if the other parts of our business keep us afloat. You are right that less brokers is bad news for clients, do you really think your bank will tell you to go elsewhere because xyz lender has a better deal for you; not likely!

[dunstonh]

The mortgage broker role saw over half of new advisers leave within the first 2 years during the good years. It was inaccurately marketed as an easy job that is well paid. Now times are bad that figure can only accelerate.

One change since the last house price crash is that increasingly, IFAs have stopped doing mortgages themselves and employ mortgage advisers. That should protect most independent firms as they are not going to be reliant on mortgage business (IFAs are effectively investment class advisers after all). However, those focused on the mortgage market are going to see things very hard.

The industry needed to lose a significant number of mortgage brokers as there were far too many. This will take care of that. Although it will likely take some very good advisers with it.

The average age of an IFA is in the low 50s and the forthcoming retail distribution review will see a cull of IFAs and tied agents. So, maybe some younger mortgage advisers may see it as an opportunity to move on up to IFA status. I have also taken on a mortgage adviser who was an IFA and has seen the mortgage role as an opportunity to scale back. Something I know another 3 IFAs are planning on doing before the rule changes come. So, we could ironically see a movement of some mortgage advisers to IFAs and IFAs to mortgage advisers.

[SmileyG]

Qualified mortgage brokers? Since when?

Are these the guys who got you a "self certificated" with uncertified earnings?

Are these the guys that failed to point out the risks in a 5X salary mortgage when the property market reversed, and interest rates rose.

Most mortgage advisers I've ever encountered had just about got their GCSEs in maths and thought the the property market had only been around for 6 months.

Nothing like doing your own research.

SmileyG

[clairehi]

Perhaps if the rubbish ones go out of business, consumers will have a higher probability of finding a good one.

I have said this before on another thread, I would not be a mortgage broker. The straightforward cases and informed consumers can get the best deals direct from the lender, and you can't blame them for doing that. that leaves you with the hard to work with, and hard to place cases. does not sound like a particularly easy or fun job to me.

[shaunrc]

Hi Martin

This is an interesting and thoughtful post. In the future where will people go for advice? Whilst there have been bad pennies in IFA and mortgage advice there has been new regulation as you say. As dunstonh often points out compared to bank advisers IFAs have much fewer complaints pro rata and going forward this should be true of independent mortgage advisers.

However I think people will be forced into leaving the industry and it may not be the ones you want to leave. The FSA regime has been much harder on advisers than say banks.

In the past I do remember you posting that people should get mortgage advice from a broker and not pay for it. If this leads to good people leaving the industry do you regret that now?

[MSE Martin]

In the past I do remember you posting that people should get mortgage advice from a broker and not pay for it. If this leads to good people leaving the industry do you regret that now?

Im not quite sure what you're referring to. I've always preferred fees free brokers, and I certainly don't regret that, and still do prefer them, though in current climes understand the needs of brokers to charge and am weaker in my message about fees-free deliberately because of that.

If you're referring to people getting advice and then processing through a cashback dealer or using a few brokers then going through the cheapest. Well first of all i always think getting more than one opinion is a good thing; and still do. As you'll see from the current article (and many previous incarnations) this is something I explain is possible, but put the ethical issue in it (the very first version may not have had that, as I did it on the back of cogerent argument) rather than recommending it. It would be amiss if i left it out, this is a consumer site not a broker site.

My job is to help consumers get the best deal, with the info available, i dont regret doing so at all. Especially considering it was a mammothly profitable and boom time for brokers. I've been pro-brokker for eight years, and commonly meet people who've been to brokers primarily because I suggest so; overall I would certainly suggest my info has (not deliberately, but as its the right thing) been net very positivie for brokers.

Yet now the climate has changed, and I think I'm happy with the balance of the guide in current climes. There is a responsibility on individuals to be aware of the services and their longevity, which is part of the reason for writing this blog. It helps people make their own decisions with regards to how far they push things, and only a negligible number of people are using cashback mortgage dealers (never mind ones who go to brokers first then use them)

Martin

[LeeTomkins]

I do think that there are some rogues in this industry and having been giving advice on mortgages and other financial matters for over 25 years now, I do feel that I have seen differing markets. However, the inability for this Government and their regulatiors to really understand what is going on at street level is liekly to bring the country to its knees (if it hasn't already!) As far as the mortgage industry is concerned there would appear to be a shift toward making rules and regulations that makes it totally unviable for the small IFA/Mortgage Broker to persist and this therefore will mean that not only bad brokers will go, but so too will a lot of good ones. This leaves the public in the hands of the banks and we all know what a bunch of crooks they have proven to be. Its time for a change of Government and a change of attitude by regulators before its too late. That has to be very very soon!!!
As far as Martin is concerned I have followed his comments carefully over the years, and have to say that he has always supported Brokers, and advised people to approach IFA's so top marks from me Martin, thanks for being on our side, because there are some good honest ones out there. Honest!!!

[shaunrc]

Hi Martin

Thanks for your reply. I am pleased to see that you are in favour of brokers as in the main I think they provide a valuable service whilst realising as I said before that there are also bad pennies. I thought about you saying that you were not sure what I was referring too so I asked an ex-colleague who remembers this period which I think was around late 2004 and I have copied his reply below.

"I recall his advice was to pick our brains , get the provider’s name and go direct"

As an IFA it can be an issue that you give someone high quality advice and they then say they can do it cheaper elsewhere. Of course once all the work is done maybe they can....
But whilst individually this works if you look at a collective situation it begs the question of why people should study improve their knowledge and give high quality advice if everyone obsesses only on price. Free lunches cannot work for everyone and if the banks get a higher share of mortgages as seems likely the way things are going then that is unlikely to help consumers.

Please do not take this as a general attack. I am sure your site has done a lot of good in terms of consumer welfare and have posted to help people on it. What I am saying is though that service and advice are factors as well as price and cost and that what seems good initially in terms of a free lunch may have unintended consequences later....

[LeeTomkins]

I am with you on that shaunrc, I too am an IFA and have been advising clients on mortgages for over 25 years, without charging fees, but we do need to earn for the level of expertise and knowledge that we bring to the table for the client, and this will not happen if clients use us then go direct to the lender.

[WelshGandalf]

Hi Martin, do you think anything will be done about direct deals? I've never had a mortgage but if I do get one I would like to go via a broker based on your advice, but this is no longer guaranteed to be the best deal anymore. This change would probably lead to me doing all the research myself and not using the broker, unless there was an end to direct deals from lenders (which brokers could not access).

[MSE Martin]

Originally Posted by shaunrc

Hi Martin

Thanks for your reply. I am pleased to see that you are in favour of brokers as in the main I think they provide a valuable service whilst realising as I said before that there are also bad pennies. I thought about you saying that you were not sure what I was referring too so I asked an ex-colleague who remembers this period which I think was around late 2004 and I have copied his reply below.

"I recall his advice was to pick our brains , get the provider’s name and go direct"

As an IFA it can be an issue that you give someone high quality advice and they then say they can do it cheaper elsewhere. Of course once all the work is done maybe they can....
But whilst individually this works if you look at a collective situation it begs the question of why people should study improve their knowledge and give high quality advice if everyone obsesses only on price. Free lunches cannot work for everyone and if the banks get a higher share of mortgages as seems likely the way things are going then that is unlikely to help consumers.

Please do not take this as a general attack. I am sure your site has done a lot of good in terms of consumer welfare and have posted to help people on it. What I am saying is though that service and advice are factors as well as price and cost and that what seems good initially in terms of a free lunch may have unintended consequences later....

Before we go any further down the track. The problem is this isn't what was said and these things self-perpetuate. THere's a broker forum called Cherry, where lots of things are there which I'm 'supposed' to have said. The fact people say I've said them doesn't actually make it true.

One of the GMTV presenters once made a comment about pushing to get proc fees back - I wasn't part of that slot - I wasnt even in that day. Yet now days Im blamed for it. So please the fact your friend recalls it that way, doesn't make it true.

The key then was (as I still am) about my preference to fees free brokers not about going direct. I have always (to the best of my memory) preferred to go through a broker due to the extra clout (as explained in my guide).#

WHat I was saying was see three brokers, and if possible go through the fees free broker. There was a time in the early days when I suggested one option was to do this een if the fee broker had given another answer you preferred. And indeed this iwas possible, hence my description of it.

Much the same now, the article states it is POSSIBLE to go to a broker and then process through a cashback broker. My job is to present the consumers with MoneySaving options and I do it. THat doesn't necessarily mean a. people follow it or b. that i 'recommend it. Yet options are there.

Frankly I get fed up with the negativity that comes from some brokers (not you). I consider myself a friend, though not unquestioning, of the broker market. Yet many brokers seem to thing unless I said "All brokers good. Pay them lots" then I'm anti. ANd the few with that attitude need to learn that it is about balance.

I know this isn't where you came from, but again asking your friend what he remembers and then explaning it as fact; don't help the situation. To (the best of) my memory it wasn't like that.

Martin

There

[TonyMason]

I have been an independant mortgage broker for 20 years. I have dedicated my professional life to it. I have studied hard to get the FPC and CEMAP qualifications. I have dedictaed my career to being as good as I can and giving the best possible advice and getting the best possible rate for my clients.

I have never in 20 years placed a mortgage with a lender as it pays a higher fee. I also have not charged my clients a broker fee.

My income in the last 18 months has gone down over 60%. I have decided reluctantly and after the hardest fight of my life for nearly 2 years to survive to throw the towel in and leave the industry.

The mortgage broker has been affected more than any other profession in the housing buying process and more than any industry in the UK. It is never reported on however. We are the forgotten industry left to hang. The FSA do not give a damn about mortgage brokers, in fact they would love there to be no industry left as its less work for them. The Council of mortgage brokers, don't make me laugh, they have done nothing to speak up for the broker.

The lenders who happily accepted our clients, yes our clients, for the last 10 years helping them make huge profits have collectively done their level best to destroy the broker market and you know what, they have suceeded.

The broker has nothing in his weaponry anymore. There is no new mortgage market as the housing market has been dead for 2 years. They cannot get the best deals as all the lenders dual price which means clients can get a better deal if they go direct. The direct lenders like HSBC do not use brokers anyway and they have all the best deals.

Lenders dual price also when the clients deal comes to an end of their rate offering better rates direct again. The final nail in the coffin has been the total death of the re mortgage market. I have had 50 or so clients in the last 6 months who have just stayed on their lenders svr as it is lower than any re mortgage rate.

Even if there were better re mortgage rates however, the fact lenders still basically do not lend over 75% still and 60% to get the best deals and the 25% price fall in the last 2 years means very few people have a 25% equity anymore so they are forced to stay with their lender.

Lenders are not lending and there is no market over 75% nearly 8 months after the bail out. The housing and mortgage market will only get close to normal when we get 90% or 95% deals across the board and reasonable rates.

That may happen but probably not before 2011. That is too late for me and most brokers. The level of brokers has fallen from 30000 to 18000 in the last year and will fall below 10000 by the end of 2010.

People will then have to go direct to their bank and get no choice and a hard sell on the insurance products.

Thats the implications. The FSA do not give a damn. The lenders want that.

I believe my leaving and others like me is a huge loss to the industry but I am past the point of caring now.

[TonyMason]

I have read Martin's blogs and although he does not slate broker infact is quite positive the whole drive is that brokers are there to be used and abused. The jist is go to a broker and get their knowledge and then go direct yourself or use a broker but only one who does not charge a fee regardless of what service you get.

Martin has not destroyed the broker industry more than the fsa or lenders but he has hardly helped it thrive.

Well now its all irrelevant as there is effectively no broker industry left anymore.

Well done to all concerned.

[TonyMason]

Actually I take it all back. This is from Martin's mortgage page

" The more loophole savvy of you may have worked out that you could of course go to a fees-free broker (or even a fee broker as long as the fee isn’t paid until transaction), then process its recommendation via a cashback site.
This is a balance of ethics and practicality. By doing this you have taken the broker's time but not allowed it to be recompensed for the advice by gaining a fee. Overall, it's likely you'll want to stick with the broker who gave you the best advice, but the option to cut the cost is always there. "

How Martin has the brass neck to now say he has not been a party to dessimating the broker industry shows he is a bare faced liar.

[MSE Martin]

Originally Posted by TonyMason

Actually I take it all back. This is from Martin's mortgage page

" The more loophole savvy of you may have worked out that you could of course go to a fees-free broker (or even a fee broker as long as the fee isn’t paid until transaction), then process its recommendation via a cashback site.
This is a balance of ethics and practicality. By doing this you have taken the broker's time but not allowed it to be recompensed for the advice by gaining a fee. Overall, it's likely you'll want to stick with the broker who gave you the best advice, but the option to cut the cost is always there. "

How Martin has the brass neck to now say he has not been a party to dessimating the broker industry shows he is a bare faced liar.

Tony Im really not quite sure how to respond to this - the use of the word "now" implies this is something I've just said. Actually while its something you've just noticed, its not revelatory... this has been around, debated and discussed for a long time.

As for the overall debate, please see the thread...

http://forums.moneysavingexpert.com/...html?t=1322241

I suggest you'll have more readers and response there than this now long passed blog. You will also see my response there to your defamatory allegation of lying.

Martin