Post - penalty bargaining

equado

I'm sure this has been mentioned before (newbie here) but I've just come out of a penalty period and was looking for another product. My advisor got me some quotes but they were pretty high. When I mentioned to my lender (Leeds and Holbeck) that I was thinking of moving they started throwing lots of different offers which got cheaper and cheaper until I ended up paying LESS than before. I even had the cheek to ask them to cut the arangement fee and they chopped off £50 (wish I had aslked for more!) ???

Robert_Sterling_3

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dunstonh

Jumping in on this thread with a question aimed at payless or mortgageman or one of the other mortgage brokers.....

As an IFA, say I am doing life cover, I have to recommend the cheapest company found unless there is a justifiable reason for doing company 2 or 3 etc. Those justifications have to be recorded and if found insufficient, I would face a fine. Under the pre FSA rules, a non regulated broker/advisor could pick any company on list and do that.

Now that mortgages are FSA regulated, does the best mortgage found have to be recommended or can any mortgage in the list be recommended?

I am wondering if the case equado highlights would still happen now the FSA are overseeing mortgages.

payless

DD - have you not added Mortgages to your "premitted business " list?

http://www.fsa.gov.uk/mgi/guide_part2.pdf

sect 2.2.10 -2.2.21 ansers this question

extracts include

Where you give advice, you must not recommend a mortgage (or a variation to an
existing mortgage) unless it is suitable for the consumer

To identify the most suitable of the appropriate mortgages you have available, you
can use ‘price’ as a basis. In this case, ‘price’ means the least expensive mortgage
based on those elements of price the consumer told you were most important
Depending on what the consumer told you, this could be, for example, the overall cost, the lowest cost over a given period or the absence of early
repayment charges.

You can recommend a mortgage on a basis other than ‘price’, for example because
another lender has a more flexible underwriting approach (MCOB 4.7.14G(2)). If
you do this, you still need to have reasonable grounds to conclude that the mortgage
is the most suitable of those that you offer.


so yes price is the over riding issue if a mortgage is suitable, and after the product type/ features are considered
..

I ask my (remtg) clients to obtain information from existing lender , but as the products are not always in the public/ intermediary domain not sure that is required , but I feel good practice


--
suppose in your comparsion to life cover, it is acceptable for you not to mention brokers who might discount the premium ( more?) or ( non advise) distribution channels such as supermarkets

dunstonh

DD - have you not added Mortgages to your "premitted business " list?

I personally dont do mortgages any more. I dont have the time. I am 95% investment/pensions. I pass all mortgage enquiries on to someone else.

I could have asked them but felt it would be better served for those reading for me to ask the question here.

Your response suggests then that what happened with equado shouldnt happen now the FSA are involved. That is good news.

suppose in your comparsion to life cover, it is acceptable for you not to mention brokers who might discount the premium ( more?) or ( non advise) distribution channels such as supermarkets

This is where fee based vs commission comes in. If someone pays me a fee, i can beat or match those cheaper distribution channels. If they don't pay a fee, the cost of advice is factored into the premium and remuneration and therefore those distribution channels can be ignored.

When i was referring to mortgages, i should have perhaps replaced the word "found" with "available. That would be a closer representation of where i was coming from. ie, mortgage broker can offer 10 mortages. Can he still pick company 8 even though there are 7 cheaper lenders

payless

not if the 7 cheaper lenders had terms and criteria that also suited the client.

dunstonh

Great.

There you equado. I hijacked your thread a bit but at least you know now that it shouldnt happen now the FSA regulate mortgages.

Thanks payless.

payless

DD
But , not sure thats the answer

the OP may have had advice from the Mtg broker, but then got the cheaper mtg via a non-advised route and/ or a single provider .

So it could happen again in mortgages, and even in the life cover situation .

equado

Oops - seem to have stirred up a hornets nest here!
Didn't mean to criticise my FA - he got what he thought was the best deal I'm sure (I'm still buying my insurances through him). It was almost accidental that I mentioned moving on to my mortgage co - I'd been phoning them about something else and then the sky fell in! But - can FAs possibly know ALL the products that are out there even with super-whizz ICT gubbins?