Mortgage advice

payless

EDIT--
this thread was originally started by MSE staff requesting comments relating to the "sneakily" article......
the following replies have been separated so these replies are not linked directly from the original article

---

without yet spending to long reading it - a few areas that initially comes to mind

1. Article States " If a broker isn’t whole of market, walk away. "
but then later in chart lists a brokers (MG)service level that is not whole of market ( see Key Facts IDD)

2, States Charcol is Whole of market - which I belive is correct for face to face , although perhaps should make it clear that Charcolonline is a panel based ( and as they state in own IDD this is not whole of market) - in linked article "broker survey" their web/tel is again incorrectly referred to as whole of market ( or if that article is correct , their own IDD is incorrectly set up )

( all regulated brokers have the choice of offering different service levels/ fee structures to different clients / distribution channels, thats why its important to get a personalised "Key Facts IDD)


3.Why ‘independent’ is irrelevant box
Whilst this does raise a discussion point , not sure I would go along with this totally -
There is much more chance of an independent mortgage adviser ( if client selects a fee based service) will be willing to include non fee paying providers in their research ..IMHO not much chance of that from a commission only broker / no advice routes (whatever they say)

Bit of you get what you pay for? - that said my personal experince and believe industry norm is that whilst an independent usually offer clients a choice of commission( with or without a topup fee) or fee only ( rebates d commission totally ) most take commission option.

Implication in text that that average broker fee ( with commission rebated) was 1% - is that really true? ( see comment above) even in chart its down to 0.33%

Also does not cover the fact that independent advisers working on a fee basis then rebate all the commission ( this rebate might even be higher than the fee charged - )


4 Not sure about the morals / regulatory impact / client protection of suggesting someone takes advice from one route then transact via a non advice route for a rebate
( if money saving theme - perhaps IMHO would be better to say , "negoitate fees/ rebates with adviser who came up with best advice )

I agree that for someone who either does own research or willing to accept limited panel with no advice , the MG route is very "money saving", well initially at least , ( and the site is very user friendly)

however under an advised route , you may find ongoing advice from an adviser more valuable than an initial cashback.

ps ...as previously requested privately , any chance of removing the bit about me , as this would be fairer to the other brokers who also now give their time on these boards

5.charcol link landing page not correct

dunstonh

3.Why ‘independent’ is irrelevant box

point removed due to error in post.

4 Not sure about the morals / regulatory impact / client protection of suggesting someone takes advice from one route then transact via a non advice route for a rebate
( if money saving theme - perhaps IMHO would be better to say , "negoitate fees/ rebates with adviser who came up with best advice )

With mortgage business, if the transaction doesnt take place through the broker but you go on to do it elsewhere, there is no legal liability against the mortgage broker for the advice given.

Cheapest isn't always best. Value for money is the important bit.

payless

dunstonh wrote:

There is no such thing as an independent mortgage advisor. The FSA have prevented use of that term with mortgage business. So, the article is wrong on that basis. I believe the information in that box is mixing up the rules for IFAs on designated investment business and not mortgage advisors.

I think in most ways we are singing off same hymn sheet, but your above statement is incorrect see
http://www.fsa.gov.uk/pages/Doing/small_firms/mortgage/faqs/mcob.shtml#disclosure

Mortgage regulation means the use of the term 'independent' (or similar) is subject to new requirements.

There are conditions a firm carrying out mortgage business must satisfy if it is to describe itself as “independent”.

and http://fsahandbook.info/FSA/html/handbook/MCOB/4/3

in particular

MCOB 4.3.7 Independence

(1) When providing information or giving advice to a customer on regulated mortgage contracts, a firm must not hold itself out as acting independently unless it intends to: (a) provide that service wholly or predominantly based on the whole market; and


(b) enable the customer to pay a fee for the provision of that service.

these all relate to the mortgage source book only

payless

although retracts from my main point....
( applies to insurance, investments as well as mortgages)

Consumer protection ... If you get advice from a broker , and then use that for a non advised sale you get no comeback, if the original advice turns out to be dud - potential loss can be much greater than initial gain!

( note I would say product choice is only part of the advice process- especially if its solely "price" driven )


Industry protection... if people take good advice from a broker, then go via a " non advised website", then these "good" advisers are either likely to go out of business, ( then the providers pull the plug and take everyone direct , and we all lose ) or refuse to deal without an upfront fee

I have nothing against true " direct/ non advised " business , nor against commission rebate / fee based - so that the work done is fairly paid ( works both ways)

that said not sure I sit comfortable with everything in that article-
the previous article had a similiar vain, but encouraged people to shop around then process via a " no fee" broker, but at least this was still consumer protected envirnoment ( with chance of that final broker advising against incorrect routes)., MG's got a good angle to the type of business it sets itself out to attract, but not sure regulatorly-wise it is aimed at those who have sourced advice eslewhere first .

stanmoresaver

The simple fact is that, it is possible to get mortgage advice for free without being sly and frankly underhand. Yes, I like a number of brokers have devoted a 3hr round trip and a couple of hours preperation and an hour face to face to visit a client who only really wants information so they can buy direct- hey thats a risk you take.

Engage a broker on the basis of no-fee, AGREED UP FRONT (there are plenty of them, but not me- i won't transact mortgage busness without a top-up fee!!), They keep the procuration fee that the lender pays them. That way, the client gets considered, professional, regulated and indemnified advice for probably their biggest ever financial transaction.

As an aside, I have been a regular poster on this site now for around a year and how many people come on here whinging about having the wrong mortgage (linked to the bulgaian libor rate or a 10 year fixed rate at 6.95%etc) which they, probably based on advice from the bloke down the pub so thought it a good idea at the time. If these people had bought through a broker they may well have redress, and for nothing except getting resentful that a lender might pay abroker £300 for their £100,000 mortgage, and wanting a cut of it!

By all means, be sensible, shop around, engage a fee free (ie someone not like me!), Whole of Market (not independant!) broker and get the benefits above, but don't try to rip someone off for a few quid, and risk being seriously financially disadvantaged by trying to DIY, when chances are you will get it, if not wrong, not fully right, and that could cost you a lot of money!

( I'll get off my soap box now!)

SS

dunstonh

Tks payless. Somehow i had got it into my head that you couldnt use the term independent but had to use whole of market. You can tell that I spend my time on the designated investment side of things

EdInvestor

Just in case you're as baffled about what these guys are on about as I am, here's an
idiot's guide to who does what among the IFAs, brokers and salesmen these days.

dunstonh

Good article Ed, apart from the rubbish from Thinc. Although their set-up is rubbish and they treat their advisors poorly, so no surprise they support multi-tie.

However, the article covers designated investment business only. It only adds to confusion when you also realise that designated investment is just one class. There is also general insurance/protection class business and mortgage class business. An advisor can be independent in one class but tied in another but still use the title independent financial advisor.

The article would have been even better if it had really highlighted the different classes and that the industry is getting muddled up, let alone the consumer.

It is spot on with the multi-tied option being pursued by some as the commissions are higher. The only reason someone would become a multi-tied advisor is because they get more commission from the company than being an IFA and they dont have the liability cost to go with it as the provider takes that on as well. The category should never have been allowed to exist in that form.

EdInvestor

Seems pretty obvious to me how it should be sorted. :idea:

Independent = Charges fee to client

Not independent = Gets paid commission by provider

After all if people will pay real money to estate agents, why not to guys like you?

innovate

If MSE isn't regulated by the FSA, and [independent] financial advice can therefore not be given on MSE, why do IFAs use MSE boards to slag out whatever they have to slag out?

TheTraveller_3

Well said innovate. This thread is in danger of looking like a load of disgruntled brokers complaining over consumers being offered a choice.