Independent adviser / broker

buffy500

Last year year had a mortgage arranged by a local (Hampshire) company.

After it was arranged they expected a fee of £750, which was absolutely not made clear to us. (It was on the key facts, but its obvious we did not read it well enough at the time...)

This companies response to our complaint that this fee was not mentioned to us was to threaten us with legal action to recover the fees. This did seem slightly heavy handed as an initial response (and less than 4 weeks from when the fee was due).

In what I suspect they hope is their final letter on the subject they state words to the effect of..

Charging a fee is very common with mortgage brokers. This option must be offered to clients to enable them to say they are independent mortgage advisers.

I assume that from this they are referring to the same thing that is mentioned in the article on this site about mortgages :
Cheap Mortgage Finding http://www.moneysavingexpert.com/mortgages/best-mortgages-cashback



Why independent is mostly irrelevant

Many brokers charge fees AND take commission. However, to call themselves an ‘Independent Mortgage Broker' they must offer an option to pay fees only, with all the commission earned being rebated to the customer.

Their case appears to rely totally on what is on paper work they have.
We were at no time offered any other option in relation to fees.

My question is in essence fairly simple... In the letter from the financial services company they suggest that the person who arranged the mortgage considered himself a "independent mortgage adviser", is this the same as "Independent Mortgage Broker" and would the same conditions apply (ie the offering different ways to pay).

(For the record, and having read posts on here about the amount of work involved I don't actually object to a fee, our objection is to the way this was not made clear beforehand.
It was not made as clear as some of the less important information in the key facts which was gone through almost word for word verbally.)

Ian_Griffiths_Halifax

Hi. An Independent Mortgage Adviser or Broker is the same thing.

You should have received an Initial Disclosure Document (IDD). This should have given you information on their charging structure and options.

If they are classing them selves as Independent as opposed to Whole of Market, then they must give you the OPTION of paying them a fee or them receiving a commission from the lender. They must rebate any commission to you if you/they go down the fee paying option route.

Have they told you how much your £750 bill would be reduced by due to the commission they are receiving from the lender?

koexelek

buffy500 wrote: »

Last year year had a mortgage arranged by a local (Hampshire) company.

After it was arranged they expected a fee of £750, which was absolutely not made clear to us. (It was on the key facts, but its obvious we did not read it well enough at the time...)

Not being harsh, but you should always read the small print.
If it was on documentation they gave you,prior to you signing up, they will use that to cover themselves.

herbiesjp

Dont want to sound harsh either.

The Key Facts is not hardly small print though is it.

It is only 2 or 3 pages long - depending on what kind of Key Facts they issued you with . And breaks down the most important areas all highlighted and numbered sections i.e. Fees and and if they are refundable etc. etc.

I can't really see any complaint being upheld on the basis of:

(It was on the key facts, but its obvious we did not read it well enough at the time...)

Rick62

As Ian Griffiths says the key document is the IDD, which lays out what services they provide and how they charge, NOT the mortgage Key Facts (although this should be consistant).

Also if claiming their advice was charged as independant then they should be rebating the commision.

herbiesjp

Hi Rick

Some people call the IDD the Key Facts - as that is what is says on the top left hand corner

Rightly or wrongly, I am assuming the OP is referring to the IDD when saying Key Facts

dunstonh

If they rebated the commission or used commission offset (fee = 750, commision = 300 so you pay £450) then they have acted within the rules of independent.

The FSA does support advisers where the fee is disclosed and it is does not get paid. However, it is recommended that a fee agreement is obtained in every case as its very hard to go to court on the basis of a Key facts document which isnt signed. However, if the fee appears in both the key facts about services/charges document and appears in the mortgage KFI, then that should suffice.

If they did not rebate/offset the commission then the transaction fails the criteria of being classed as independent. Did they set up your insurances on nil commission basis as well as you were paying a fee?

Rick62

Yes, 'Key Facts about Our Services', or 'Key Facts about This Mortgage'. Once again FSA keeping everything really clear.

We can't assume, buffy, which Key Facts were you talking about, did you get both and were they consistant?

payless

dunstonh wrote: »

If they did not rebate/offset the commission then the transaction fails the criteria of being classed as independent. Did they set up your insurances on nil commission basis as well as you were paying a fee?

Not quite

They need to offer a "fee only" based service ( with all commisison rebated. But they can also offer a fee + commisison ( no rebate) or a commision only arrangement , and still be independent - so long as they at least offer the first service

ie A broker might say my fee only service is £500 and you get all commission back, or My fee is £200 + he takes commission ... if you choose the latter , so long as you had a choice , he is still independent

payless

Both sets of the Key facts ( IDD and product) and the offer letter should disclose the fees and commission ( and rebate - although its sometimes harder to get this last bit done properly )

dunstonh

payless wrote: »

Not quite

They need to offer a "fee only" based service ( with all commisison rebated. But they can also offer a fee + commisison ( no rebate) or a commision only arrangement , and still be independent - so long as they at least offer the first service

ie A broker might say my fee only service is £500 and you get all commission back, or My fee is £200 + he takes commission ... if you choose the latter , so long as you had a choice , he is still independent

You are correct. However, I was going by the complaint response which stated they had to offer that option to be classed as independent. That suggests they were doing the transaction on that method. Otherwise their response is not consistent with the complaint.

If they are claiming the fee is because they are independent, then they should have rebated or offset the commission against the fee.