An Open Letter To Mortgage Brokers.

wisbech_lad

Both Stonehouse and the kaver seem to be unable to either spell, use a spell checker, or write coherently (though Stonehouse is a bit better in this regard) I am almost inclined to think that thekaver is a joke, or drunk.

I, for one, would be dubious of buying a used car, or even mortgage advice, from people who jump into a serious thread on the value of brokers, with such ill-thought out and presented points.

Chez Guevara is the man you want putting the broker POV across.

Amazonemerald

MSE_Martin wrote: »

Dear Mortgage Brokers.

It's come to my attention recently that there are a small number of brokers out there who see me as a figure of hate, in fact I've even had some brokers anonymously contact me to request I end my life.

Of course thankfully there are many brokers who understand the work I do, and support it, and contribute to helping consumers on this site. Yet I'm concerned about the damage the minority may cause the majority.

What I find most bizarre about this is I've spent my entire career being a supporter of the mortgage broker industry. I've lost count of the number of people who've approached me in the street and said "I got a great mortgage deal, by going to a broker as you suggested." or "I didn't go to my bank this time, I used a whole of market broker, because I wrote it down when you said to on the TV".

Therefore to be attacked by a small segment of the broker industry seems strange. The banking sector, claims handlers, secured lenders... I'd be less surprised by, but the one advice sector I actively support and postively push people to go to?

Cherry

The focus of the venom seems to centre around the forums of a small website called Cherry, which even apparently has a board dedicated to me. I did once read what it said, yet many of the comments got so ridiculous, and libellous, it became no longer worth my time or energy to do so.

One of the main problems with Cherry is that someone posts an inaccurate comment about what I've said, and then people wind each other up. Yet the info is usually completely erroneous.

I suspect some of it is to do with the fact I turned down an invite to discuss things with brokers on the site.

To be honest I get about 300 requests a week for similar things, and most, many much bigger institutions don't take umbridge when I turn them down. Yet as I said in my reply, I'm happy to engage with brokers here on this site which reaches many more people and, I suspect, brokers (and I hope this thread goes some way to do that). Though I'm not sure that was ever actually communicated.

My view on brokers.

So let me yet again, clarify my view on brokers. For the many years I've been doing this, whenever talking, broadcasting or writing about mortgages my constant push has been to say use a "whole of market" mortgage broker (well since the term came in anyway) to get you the best deal.

Of course as this is MoneySavingExpert my agenda will be to do it fee-free if you can; though in recent tough times I've actually shifted my stance slightly as more brokers charge in tough times to be much less rigid on that push as getting good advice should be the primary focus.

To those brokers who've made their minds up that I'm anti-broker based on what they've heard. Why not read what I actually say in the full guide to mortgage advice and judge the stance for yourself? The opening sets the scene pretty well...

"Don’t trust bank or building societies' mortgage advice; they’ll just flog you a mortgage from their own limited range. Use this broker plus technique to get free advice on the best deal and possibly grab cashback too.

First use a whole of market broker to find the right mortgage and use its clout to help you get accepted. Plus, as sadly some lenders have stopped brokers accessing their products due to the credit crunch, to ensure you get the very best deal, you now need to check some specific lenders yourself."

Sadly in recent times the growth of direct deals has meant I've added a second stage of suggesting people check out the FSA's website AFTER going to a broker to check there are no deals being missed, then going back to the broker to discuss it - which enables the broker to weigh up the pros and cons of all deals with their client.

While I know for brokers' pockets, it would be better if I didnt mention this, I'm sure all reasonable brokers will understand that my prime concern is to provide consumers with all the info and therefore this is something I need to do.

However I know at the moment the lack of mortgage business coupled with direct deals is hurting mortgage brokers a lot and I suspect this is one of the reasons why anything that isn't a complete "just use a broker" comment may upset some in an industry that's been hit by poor economic time.

For me lenders withdrawing deals from the broker market so they're only available direct is a retrograde step, and anti-consumer, something I've written about before here, and even broadcast about the issue on prime time ITV.

What about cashback mortgage brokers?

I know there's been some comment about the fact that I include the few cashback brokers in my guide. First of all I feel it's entirely appropriate to let people know about this option, that's what I do in all subjects.

However the frustration and the hatred I've read about some of this, I suspect comes mostly from people who've never actually read what I say. This is from the guide and the font sizes used here are as in the article.

"Yet remember this is ONLY for the very money savvy, who know and can identify exactly the right mortgage for themselves. Do remember...

...for most people, a broker’s weight on your side for £100,000s worth of mortgage transaction’s worth more than a few hundred quid cashback."

In earlier incarnations of the guide (now quite a long time ago) I did include the option that people could go to a broker, get the info and then process it through one of these sites. [/b]

After polite representation and legit argument from some brokers on this site, I changed my stance on that, as I agreed with the points made. It now says...

"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."

And remember this is after an explanation of why keeping an advisory broker working through the process is worthwhile as the support is needed.

I consider this to be a totally reasonable inclusion in the guide. Though it's something I don't think I've ever mentioned on TV or radio as in the much shorter time I'm given it's not worth prioritising.

It's worth noting that our (admittedly very rough) figures show very substantially less than 0.1% of readers of the guide actually click through even to bother to look at the cashback sites.

Should I change my stance?

If I did, it would be to not suggest people use brokers. I don't believe that's appropriate, though sometimes after some of the venom, I get tempted for a second or two. I will continue to support the broker sector.

I don't know what impact I've had on the market place, but as much of the complaints are that I'm too influential, if that's true, there will be many 100,000s who've gone to brokers because I've said to.

Someone not qualified shouldn't talk about mortgages.

This is one of the complaints I find, frankly, risible. To suggest only mortgage brokers can write or talk about mortgages is bizarre. It would seem that mortgages should thus never be on TV, radio, web or in newspapers in that case.

Of course I'm not a qualified mortgage broker. My entire stance is that I write NOT as part of the finance industry. I am a journalist (a qualified one at that) and that's my work.

Yet there is a difference between talking about the issues happening, the trends and extolling people to act (rather than how to act) and telling people what to do. I have an enormous mailbag, many thousands of emails a week, and concern over the mortgage is one of them.

So while I think it's well worth while warning people to "check they're not overpaying" and that "pundits predict the end of cheap fixed" and explain how mortgages work. I ALWAYS refer people to mortgage brokers to look at someone's specific situation. This is the great contradiction.

Brokers are doing themselves no favours.

Having said all that, I want to make it plain that some of the nasty attacks that I've seen recently, do the broker industry no credit and I would hate the behaviour of a few to discredit that of the many.

I am also saddened at the very few number of brokers who've come here, to make unfounded derogatory comments, in all areas, and risk ruining the work this site does to help many people.

Many of these bring the broker industry in to disrepute and sully the reputation, the last thing that is needed at the moment. In one thread where a mortgage broker tried to discourage others from helping people here, (s)he was roundly lambasted by members of the pubic and sadly was another bad notch.

Again I suspect that's because the premise started by saying this site recommends people to go it alone or through comparison services - which actually is the opposite of what I write. The shame for me is these comments are made based on such erroneous statement; I don't understand why they're written.

To conclude. I intend to continue to do what I do. To continue to suggest people use whole of market brokers. And to continue to ignore some of the ill-founded and ignorant comments I've read, but respond and react to those trying to make constructive points that will help consumers.

It is my hope that this open letter clears the air, and (yet again) clarifies my stance. It's my hope that most reasonable brokers will see we're all on the same side in helping consumers get the best deal.

Kind regards

Martin Lewis

PS Please feel free to link to this thread from other arenas that brokers will see.

PPS This is a first draft and needs some proofing which I will come back and do later. I will also respond to any further points raised in this rather than below.


1st Update. 11.30am Mon 1 Dec 2008

Thank you for all the feedback. I just wanted to make clear that the vast majority of brokers on this forum have always been polite and helpful. In fact when I redrafted the latest version of my mortgage broker guide I came here for feedback before it was published and there were many helpful tweaks because of the brokers.

Now to answer specific questions.

"First you advised people to fix, now you're advising people to ditch their fix"

This seems to be something many brokers who seem to have come from the Cherry site are saying. I find this confusing, as I've never a. Advised anyone. b. Written people should fix. c. Written they shouldn't fix.

This is one of those "please actually read what I wrote, or listen to what I said rather than what you've been told I said, scenarios."

A. Advice. This site doesn't give advice, it gives information. It never mentions specific mortgages and always directs people TO MORTGAGE BROKERs.
B. Telling people to fix. The nearest this site has got is to say "if you're going to fix imminently, fixed rates are rising so act quickly" that's not the same as saying FIX your mortgage. It's an urge to sort it soon - again DIRECTED TO A BROKER and never about a specific product.
C. Ditch your fix. Again I certainly thing that'd be wrong for the vast majority of people. Yet it's what everyone's asking, so I produced a checklist and told people in the rare circumstances where it may add up - to GO TO A BROKER. You can read exactly what was published here (top left of this). But here are a few highlights...

i. It was titled "Fixed mortgage? Can you ditch & switch to a low rate deal?" note the question marks.
ii. Then having explained that some on variable rates would gain it says "Ditch your fix checklist! By definition, those on fixed-rates haven’t gained. Many are asking whether ditching & switching, even with a penalty, will save you cash. Here's the checklist:"
iii. Then after the checklist it says "How to find out: If the checklist makes a ditch, switch & save look possible, contact a whole of market broker to do some detailed comparison numbers, incl. switching fees. Most reputable brokers won’t charge you unless you actually end up getting a new deal through them."

I'm not quite sure how anyone can see that as a call to ditch your fix... but there we go.

Martin, with the greatest respect you and many of your responders are missing the point about Advice and Regulation in the mortgage market - as indeed most readers of the Tabloids do. If an individual perceives information provided as "advice" and acts on the information provided, then the provider may find themselves liable for having given what the reader perceived as "advice". To give advice an individual in the mortgage market must be regulated and you and the tabloids sadly are not. You should have a WARNING at the end of your "information" page when conveying anything of a regulated nature.

Good site otherwise.

dunstonh

I imagine that brokers are gutted that people can share information about deals and costs of products and fees they paid, using the Internet. So chances are MUCH LESS now that customers will be ripped off by brokers, and missold wrong products. Because of sites like this we can gain INFORMATION: mortgage cashback, whole market brokers, remortaging to get better deal.

That is very naive. Instead of a local mortgage adviser employing local people and supporting the local economy, all you are doing is using a distance broker and supporting them. They get the commission instead of the local broker. It doesnt cost any more or any less.

Whilst some people are quite capable of DIY financial products, many are not and I can tell you that I have had to sort out so much mess over the years from DIY gone wrong. Most advisers will say the same. Not everyone is up to it. However, there is the choice and choice is good.

But if a broker ripping it's customers for many years and now afraid of loosing a job, then maybe it's time to review the way to deal with customers.

Level of income and quality of adviser dont go hand in hand. Like the last house price crash, a lot of good people will be lost as well as some of the bad business models.

This is exactly what I tried to underline in my previous post. Some brokers use unprepared customers. It's so hard to find the one you trust.

That doesnt reflect reality though. Even the FOS have come out and said that public/media perception does not match the reality. Independents have just 2% of complaints (with most of those not upheld) despite doing the majority of transactions. That is a tiny amount when you consider it. If things were truely as bad as made out it would be a lot higher than that.

ALSO FEE FREE BROKERS? IS THEY ANY OUT THEY THESE DAYS, CAUSE I KNOW I WOULDNT WORK FOR FREE!!!!!!

On the IFA side, we cant use the term fees fee although mortgage advisers can. Its a balls up by the FSA. Comission is a method of remuneration as is fee and fee can often be cheaper. e.g. if commission is £700 and fee is £500 then the person is £200 better off. Yet people dont like paying a fee. Even when that option is presented, you still get people who find it hard to understand that paying is cheaper than not paying.

Personally, I do think mortgages are going the way of home insurance and car insurance and you will see a massive decline in broker numbers. That will be a shame as we know that a lot of people dont buy the right home insurance or car insurance (or more commonly leave options off that they need). Life assurance is another where many people buy on price without realising that they could be getting a sub-standard product (like yearly renewable term instead of level or reviewable premiums instead of guaranteed etc).

People shouldnt be pushed into DIY or getting advice. If they can DIY then go for it. If not, then they should seek advice. There is room for both. And it shouldnt be assumed that advice will cost more than DIY. Very often its the reverse.

thekaver

martin is indeed suporting brokers in 1 sense, but also making it hard for us to charge a fee! In todays climate a fee is needed as they is that many mortgage applications not completing, so alot of work being done for nothing!

Another point which is good to point out is he talks of direct deals that brokers dont have access to! but they is no meantion of exclusive broker deals that the normal public cant get without a broker!

thekaver

wisbech_lad wrote: »

Both Stonehouse and the kaver seem to be unable to either spell, use a spell checker, or write coherently (though Stonehouse is a bit better in this regard) I am almost inclined to think that thekaver is a joke, or drunk.

why the need to start skitting, !!!!!!!:mad:

IFA-Steve

As an IFA (clue is in my log-in name) I am pleased and confident with the quality of research underpinning Martins articles.

Sometimes he DOES potentially rob me of commission and/or fee's by giving the financially savvy person enough information to make an informed decision on financial products enabling them to "buy direct" - thats life and it must happen all of the time anyway, just with a better result from better information.

Purely mortgage broking is nigh on impossible at the moment due to the dreadful state of the housing market and so I do feel for my colleagues in the mortgage related marketplace - BUT THIS IS NOT MARTINS FAULT!

On balance I am convinced that Martins site does a lot more good than harm to the financial services industry because he makes people aware of the issues as they arise - in plain english; and I am sure that most people would seek further advice spurred on by the knowledge that they could save money.

I have had new clients come in to see me armed with print outs from Martins site asking for "one of these". They are usually pretty close to reaching a decision and are either grateful for a bit of free advice from me and to do it themselves or to have the five star service and allow me to earn a fee and commission for my time.

Keep up the good work Martin and here's to a better 2009 because I think things will get worse on the high street before it gets better.

Follow Martins advice and you will not go far wrong,

Best wishes

Steve

thekaver

lethal0r wrote: »

Very true. Any intelligent person who is good with figures will know 95% of what a broker knows about mortgages.

id like to put that to the test?

harryhound

grogdog wrote: »

if you think it is that easy why dont you have a go at passing the exams:rotfl: :rotfl: :rotfl: :rotfl: :rotfl: :rotfl: :rotfl: :rotfl: :rotfl: :rotfl: :rotfl:

And award yourself 95% of the commission:D:D:D:D:D.

My lifetime of experience suggests that the majority of advisers, in all branches of the service industry, don't seem to have a department that can look out for its former clients, and tell them when to switch. A -> B, Buy -> Sell etc.

Some are happy to make a sale and trouser the commission.
Some will try the "Churn & Burn" approach, when sitting round in the office playing cards, to stay in business.

A site like this actually does a lot for active brokers by trying to wake up lazy numpties who cannot be bothered to realise that their inaction is costing them 1,000's.

======================================================================================
Tell me, is this the same FSA that was hard at work doing the routine sign off of Northern Wreck accounts, while users of this site got an all day commentary, on the state of the queue outside the Moorgate branch in the City of London. Very fit and proper.
It reminds me of Major & Lamont listening to their tranny on "Black Wednesday".

"4.10 Deciding whether a person giving advice must be authorised by the FSA is determined by applying four tests:
• Is the provision of advice carried on in the UK?
• Is the advice given by way of business?
• Does the advice relate to a specified investment?
• Does the advice relate to a specified activity?
4.11 All four tests must be met to require FSA authorisation.."

HelpWhereIcan

Stonehouse wrote: »

1- It is a general problem that allot of so called experts on TV do not have any specific experience in the industry that they comment on. In my opinion it is not simply about a qualification, but the experience of having worked in that specific industry. For example an experience mortgage broker could have literally have advised 1000s of clients, and no exam can substitute that type of experience or insight.
2- Whole of Market does not mean Independent. A whole of market broker can choose to deal with a limited number of lenders,and still present a whole of market proposition. An Independent broker has to offer a fee only option- along side any commission option, and in my personal opinion a truly independent broker should be able to refer a client to a lender that does not pay any commission- and in that case it is justified to charge a fee. In fact there are many nsances where a fee is justified depning on the work involved- as good added value advise from an experienced broker is underestmated.
3- For example a local broker(not call centre based adviser) will have strong local property insight with contacts with many local profesionals to include surveyors and solicitors - who can be pivotal in any purchase. In relation to advise I am shocked at the amount of invidules that get dragged into focusing on the lowest rate- while in many instances if proper holistic advise is given- products such as offsets can be recommended to the right client that can result in savings of thousands of pounds.
4- Also remember your bank adviser works for that bank- while your mortgage broker should have your interest as priority as they work on your behalf.
5- Historically by using different clubs and mortgage networks brokers have also had buying power with lenders- which gave them access to some exclusive products, but also the potential depending on many factors of superior service levels. As the relationship with the banks and brokers is of a business to business natre- a good brokerage should also have instant access to industry developments,that can include securing products for cients before they get withdrawn.
6- If your application is declined by your bank you will have to start shopping around again- while a competent broker should be able to place (if placeable) your deal with a different lender in a swifter manner.

I am obviously biased as a mortgage broker, and can add much more to the above list as I strongly feel that the benefit of an experience mortgage broker is truly under estimated. To conclude I have had the pleasure in my career of working with some very experienced and competent advisers- and if you have had the pleasure of being serviced by them I promise you would agree with all my above points.

All the best - and once again Martin thank you for this website.

Tony

You know, funny thing is that Martin has given all of your points 2 -6 as reasons to use a broker at one time or another.

Where he hasn't those of us who have been here for a while (rather than on a guerilla mission from Cherry) have gone to great pains to try and get that point over to members.

The people screwing that bit up for everyone are the ones who make these stupid and public attacks on Martin - who looks worse Martin or brokers? I really wish people would think twice before 'defending the profession' (which it is not - yet) half cocked.

thekaver wrote: »

martin is indeed suporting brokers in 1 sense, but also making it hard for us to charge a fee! In todays climate a fee is needed as they is that many mortgage applications not completing, so alot of work being done for nothing!

Assuming Martin has the power in the industry you credit him with, would it not be better to read his guide before judging whether he says the current climate may dictate paying a fee?

thekaver wrote: »

Another point which is good to point out is he talks of direct deals that brokers dont have access to! but they is no meantion of exclusive broker deals that the normal public cant get without a broker!

Which is why the guide tells people to see what the best a broker can do is, check to see what the best direct deals are and then go back and discuss with the broker.

If a broker cannot justify your advice and service as being the reason the customer should take the deal that may appear more expensive through them (how about explaining retention strategies, previous record for passing on cuts etc) then the deal on offer direct is obviously better - you win some you lose some.

The same advice I gave to two clients yesterday - one staying with current lender on SVR another changing to a deal through me based on flexibility of the deal. But, I received a phone call from the first one's sister at 9:05 - because she knew I would give the right advice whether it earned for me or not.

That's what will get you through the current market - proving your value, not !!!!!ing at journalists.

thekaver wrote: »

why the need to start skitting, !!!!!!!:mad:

Grow up

HelpWhereIcan

thekaver wrote: »

id like to put that to the test?

What we do is not rocket science. We don't do ourselves any favours by trying to pretend it is.

For most people what we offer is a service to those who don't have the time, confidence or whatever to do it themselves.

Most people with the time or inclination to do all the research could get to the same low cost product we could - albeit it would take them longer - after all that is what sites like this (and Moneyfacts etc etc) are set up to help them do.

However, for those with more complicated needs we offer a service they could not do for themselves. An amateur will not get to know enough about criteria, current service standards etc in any where near a reasonable time. But that is learnt through experience not by passing Cemap and putting on a shiny suit.

The inexperienced or badly trained broker can be very damaging. It drives me mad to see how many people think they have passed Cemap so know it all - I interviewed one last week who could not see why I would not take him on in an IFA position just cos he has Cefa but no practical experience. A trainee mortgage adviser/paraplanner position while he got some experience and was trained up was beneath the nattily dressed idiot, so I sent him off packing to the bancassurer who was apparantly desperate to employ him because he was ambitious and wanted to earn lots of money.

Experience and knowledge is where we earn our money (and I am not talking sub prime), not passing Cemap and calling ourselves professionals.

We should be showing and proving where we add value not trying to claim the whole of the mortgage market.

To say that everyone should broker is just as mis-leading as saying everyone should DIY. If we get that point across, we will be one tiny step closer to being seen as professionals.