mortgage broker problems...

the_son_of_Richard

Hello there,

Not sure if anyone could advise us or not, or if this is the norm?

We recently contacted a whole of market Fee's Free mortgage broker for a right to buy council property. Everything was fine, he took all our complete details and came back with a mortgage offer which is okish, but the problem is the Insurances.

He gave us quotes for all insurances. We asked if we could go ahead with the mortgage, but not the insurers, as we have found some that are cheaper and slightly better.

He insisted we forwarded our quotes to him so he could match them, all he's done is not read them properly and picked holes in everything.

Now he's saying it's not worth him organising the mortgage alone, as the commission he'll recieve from the mortgage lender would not make the case commercially viable, so would have to charge us a fee on top.

Is this right?

Now we're worried whether to bother at all, as this would mean more checks made on us etc....

we would greatly appreciate if anyone could help us.

Thank you, Shaun

dunstonh

It is quite possible (indeed probable) that if your mortgage is small or he is recommending a lender that pays no commission that he isnt earning any money (or very little). The insurance is often where the real income for mortgage advisers is.

In which case it is up to him if he chooses to levy a fee or not. As long as he makes you aware of the fees prior to you being committed to them then there is no issue. If you check the key facts document he issued at the start, it should mention fee option.

minimike2

Just go to another broker, he is messing you around.

It should be made clear at the outset if there would be a fee payable or not, and if not having a fee would incur any conditions.

Tell him he either does it for just the commission from the lender or not at all. I know which one I would prefer!

happybroker

It sounds like he's done all the leg work anyway. He would be better to take what little commision there is in this, apologise for being a prat over the insurance and hope that you come back to him in the future.

dunstonh

It does seem a shame as a correctly presented key facts about our charges would have made this clear (unless the OP changed their mind between being given the key facts and now). I dont know why some advisers hide from their fees. Being upfront and honest is always better received.

Alias_Omega

Who were you using for the mortgage, and which broker did you use.

Were looking for a right to buy mortgage whenever the paperwork comes through with the final price.

Did you need a deposit?

the_son_of_Richard

Hi all,
Thanks for all the replies so far.

He will be recieving £516 from the lender.

The purchase price is £124,000, less discount, total mortgage needed is £86,000.

none of the paper work states that we are required to purchase insurances with him, nor that there will be any fee's if we don't.

we have had a lot of checks made recently, mortgage, balance transfer etc, this has brought my credit score down from 856 to 669!
My wifes credit score is 725, but she has a ccj from september 2002 and a default in 2004. both satisfied, but obvouisly would still be a problem.

We want to tell him to...get lost, but we're worried we won't get another offer and he has all of our details, including bank and credit card numbers.

very cross. :mad:

HelpWhereIcan

Whether the broker finds your case financially worthwhile without a broker fee or commission from the insurances is, of course, a commercial decision for him.

There is no regulatory requirement that prevents him from changing the basis on which you are charged (or the cost) until, as dunstonh says, you are commited to the transaction which it does not sound like you are.

You cannot force him to transact your mortgage for you.

However, I would argue that raising the issue with you at this seemingly late stage is against the FSA's Treating Customers Fairly initiative (TCF) - possibly Outcome 3

Outcome 3: Consumers are provided with clear information and are kept appropriately informed before, during and after the point of sale.

It could be worth complaining to him that his failure to mention the importance of the insurance sale, while not a breach of regulations (only just mind) is not really in the spirit of TCF and that you feel his failure to mention this has lead to you allowing him to carry out credit searches that you would not have agreed to had you known what would happen.

£516 for a mortgage of £86,000 is at the higher end of what most lenders would pay and, while not his ideal level of remuneration, is better than the average £301 he would get from a prime lender.

He may want to consider accepting this in the light of your belief that, if he does not, you will feel obliged to make a TCF related complaint due to the restricted options available to you and the fact that he did not make it clear how important the insurance sale was to him from the outset.

Even if no compensation etc would be due, it will still cost his firm as they have to report all complaints (justified or not) to their PI insurers and the FSA/Network, will have to spend money investigating it and likely have to spend money if the complaint goes to the Ombudsman. For this reason, he may well accede to your request to save the bother etc. (something he should have agreed to anyway if he values his reputation)

As has been said, some business is better than none for his efforts. But then again, a conversation along those lines will be a good indication that the relationship is so badly damaged it may be unwise to continue with it from both perspectives.

Do you know the lender? If so, it should be possible to have a new broker of your choice take over the application with your written consent explaining that your relationship with the old broker has broken down and you no longer authorise them to act for you.

Another alternative if he works for a firm with more than one adviser is to speak to the firm and see if your case can be dealt with by another adviser who will not have the same issues with you, nor you with them.

the_son_of_Richard wrote: »

He gave us quotes for all insurances. We asked if we could go ahead with the mortgage, but not the insurers, as we have found some that are cheaper and slightly better.

He insisted we forwarded our quotes to him so he could match them, all he's done is not read them properly and picked holes in everything.

To try and be balanced here, I would tend to be a little surprised at this if he is independent for insurances.

With respect and depending on his experience, it is unlikely that he will have mis-read them and what you may see as picking holes may actually be valid points.

I am independent and will often identify situations where a client thinks they have saved £x per month on a package of insurances, but when looking at them often find that they have important differences.

Examples from real life recent cases

1 a £150 excess on a buildings & contents policy that meant they saved £3 pm compared to the one I quoted with a £60 excess. When my excess was increased to £150, my policy was £5 per month cheaper than the 'direct only' insurer.

2. A Critical illness policy from an online comparison site that was £7 pm cheaper but had only 21 conditions listed compared to the policy I quoted with 34 conditions. My quote included waiver of contribution, theirs did not. Theirs also assumed a 10% interest rate while mine had a mortgage repayment guarantee. Mine had various added extras that the 'cheaper' one did not include.

If your adviser is tied to one particular insurer (which is entirely possible), I would agree that it is possible he is picking holes just to try and save the sale.

However, make sure that you are 100% sure and that you have not both locked horns with neither wanting to give way.

Try posting some basic details of the policies and some of his objections and hole picking and people here may be able to comment helpfully.

As far as his having your details go, I should not worry. If he uses them without your permission he is in a whole word of excrement and therefore he is v unlikely to abuse them.

happybroker

I think you could go high street with that adverse provided they're not for crazy amounts of money.

Re your information...it's all covered by the data protection act and assuming this guy isn't completely brain dead it should be safe. It wouldn't take long for the finger to be pointed in his direction if there was a problem anyway.

Some people work for 2 weeks to receive that sort of money, all commision is welcome in the current climate so he should be thankful and if none of his paperwork states he will charge a fee he can't charge you a fee, simple.

HelpWhereIcan

the_son_of_Richard wrote: »

My wifes credit score is 725, but she has a ccj from september 2002 and a default in 2004. both satisfied, but obvouisly would still be a problem.

CCJ will 'drop off' in Spetember and default may not be the problem on its own(depending on size etc) you think it will (or may have been led to believe).

You may be better waiting until Sept/Oct in the hope of getting a better deal as your scores improve/recover from recent searches.

Risk is that the market tightens more and deals available are worse due to worsening credit crunch. How likely that is is anyone's guess - some lenders have been improving their deals this weak and RBoS is going back to 95% lending on Monday so that is no means as certain as it seemed a few weeks ago.

The right to Buy will always be there for you - even if it has to be revalued in September, your price is more likely to go down than up.

Just a thought

minimike2

I would snap someones hand off for that business....but then again im happy even just to arrange a B&C policy...I never turn down business as you never know what it might lead to.

I did a £30k BTL remortgage that I netted £92 on....it cost me £60 in petrol for the two trips there and back. A few weeks later they recommended me to someone else and I ended up with £1k commissions........NEVER refuse business is how I see it.