'Mortgage Brokers In Trouble: Bad News for Consumers' blog discussion

MSE_Martin

shaunrc wrote: »

Hi Martin

Thanks for your reply. I am pleased to see that you are in favour of brokers as in the main I think they provide a valuable service whilst realising as I said before that there are also bad pennies. I thought about you saying that you were not sure what I was referring too so I asked an ex-colleague who remembers this period which I think was around late 2004 and I have copied his reply below.

"I recall his advice was to pick our brains , get the provider’s name and go direct"

As an IFA it can be an issue that you give someone high quality advice and they then say they can do it cheaper elsewhere. Of course once all the work is done maybe they can....
But whilst individually this works if you look at a collective situation it begs the question of why people should study improve their knowledge and give high quality advice if everyone obsesses only on price. Free lunches cannot work for everyone and if the banks get a higher share of mortgages as seems likely the way things are going then that is unlikely to help consumers.

Please do not take this as a general attack. I am sure your site has done a lot of good in terms of consumer welfare and have posted to help people on it. What I am saying is though that service and advice are factors as well as price and cost and that what seems good initially in terms of a free lunch may have unintended consequences later....

Before we go any further down the track. The problem is this isn't what was said and these things self-perpetuate. THere's a broker forum called Cherry, where lots of things are there which I'm 'supposed' to have said. The fact people say I've said them doesn't actually make it true.

One of the GMTV presenters once made a comment about pushing to get proc fees back - I wasn't part of that slot - I wasnt even in that day. Yet now days Im blamed for it. So please the fact your friend recalls it that way, doesn't make it true.

The key then was (as I still am) about my preference to fees free brokers not about going direct. I have always (to the best of my memory) preferred to go through a broker due to the extra clout (as explained in my guide).#

WHat I was saying was see three brokers, and if possible go through the fees free broker. There was a time in the early days when I suggested one option was to do this een if the fee broker had given another answer you preferred. And indeed this iwas possible, hence my description of it.

Much the same now, the article states it is POSSIBLE to go to a broker and then process through a cashback broker. My job is to present the consumers with MoneySaving options and I do it. THat doesn't necessarily mean a. people follow it or b. that i 'recommend it. Yet options are there.

Frankly I get fed up with the negativity that comes from some brokers (not you). I consider myself a friend, though not unquestioning, of the broker market. Yet many brokers seem to thing unless I said "All brokers good. Pay them lots" then I'm anti. ANd the few with that attitude need to learn that it is about balance.

I know this isn't where you came from, but again asking your friend what he remembers and then explaning it as fact; don't help the situation. To (the best of) my memory it wasn't like that.

Martin

There

TonyMason

I have been an independant mortgage broker for 20 years. I have dedicated my professional life to it. I have studied hard to get the FPC and CEMAP qualifications. I have dedictaed my career to being as good as I can and giving the best possible advice and getting the best possible rate for my clients.

I have never in 20 years placed a mortgage with a lender as it pays a higher fee. I also have not charged my clients a broker fee.

My income in the last 18 months has gone down over 60%. I have decided reluctantly and after the hardest fight of my life for nearly 2 years to survive to throw the towel in and leave the industry.

The mortgage broker has been affected more than any other profession in the housing buying process and more than any industry in the UK. It is never reported on however. We are the forgotten industry left to hang. The FSA do not give a damn about mortgage brokers, in fact they would love there to be no industry left as its less work for them. The Council of mortgage brokers, don't make me laugh, they have done nothing to speak up for the broker.

The lenders who happily accepted our clients, yes our clients, for the last 10 years helping them make huge profits have collectively done their level best to destroy the broker market and you know what, they have suceeded.

The broker has nothing in his weaponry anymore. There is no new mortgage market as the housing market has been dead for 2 years. They cannot get the best deals as all the lenders dual price which means clients can get a better deal if they go direct. The direct lenders like HSBC do not use brokers anyway and they have all the best deals.

Lenders dual price also when the clients deal comes to an end of their rate offering better rates direct again. The final nail in the coffin has been the total death of the re mortgage market. I have had 50 or so clients in the last 6 months who have just stayed on their lenders svr as it is lower than any re mortgage rate.

Even if there were better re mortgage rates however, the fact lenders still basically do not lend over 75% still and 60% to get the best deals and the 25% price fall in the last 2 years means very few people have a 25% equity anymore so they are forced to stay with their lender.

Lenders are not lending and there is no market over 75% nearly 8 months after the bail out. The housing and mortgage market will only get close to normal when we get 90% or 95% deals across the board and reasonable rates.

That may happen but probably not before 2011. That is too late for me and most brokers. The level of brokers has fallen from 30000 to 18000 in the last year and will fall below 10000 by the end of 2010.

People will then have to go direct to their bank and get no choice and a hard sell on the insurance products.

Thats the implications. The FSA do not give a damn. The lenders want that.

I believe my leaving and others like me is a huge loss to the industry but I am past the point of caring now.

TonyMason

I have read Martin's blogs and although he does not slate broker infact is quite positive the whole drive is that brokers are there to be used and abused. The jist is go to a broker and get their knowledge and then go direct yourself or use a broker but only one who does not charge a fee regardless of what service you get.

Martin has not destroyed the broker industry more than the fsa or lenders but he has hardly helped it thrive.

Well now its all irrelevant as there is effectively no broker industry left anymore.

Well done to all concerned.

TonyMason

Actually I take it all back. This is from Martin's mortgage page

" 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. "

How Martin has the brass neck to now say he has not been a party to dessimating the broker industry shows he is a bare faced liar.

MSE_Martin

TonyMason wrote: »

Actually I take it all back. This is from Martin's mortgage page

" 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. "

How Martin has the brass neck to now say he has not been a party to dessimating the broker industry shows he is a bare faced liar.

Tony Im really not quite sure how to respond to this - the use of the word "now" implies this is something I've just said. Actually while its something you've just noticed, its not revelatory... this has been around, debated and discussed for a long time.

As for the overall debate, please see the thread...

http://forums.moneysavingexpert.com/showthread.html?t=1322241

I suggest you'll have more readers and response there than this now long passed blog. You will also see my response there to your defamatory allegation of lying.

Martin

AL2009_2

It has not been reported in the national news but The Mortgage Times Group network went into administration towards the end of 2009, taking roughly 400 brokers with them. Just wonder how many will leave the industry.....


With regards to Martins comments on brokers "......If you're referring to people getting advice and then processing through a cashback dealer or using a few brokers then going through the cheapest. Well first of all i always think getting more than one opinion is a good thing; and still do. As you'll see from the current article (and many previous incarnations) this is something I explain is possible, but put the ethical issue in it (the very first version may not have had that, as I did it on the back of cogerent argument) rather than recommending it. It would be amiss if i left it out, this is a consumer site not a broker site.

My job is to help consumers get the best deal, with the info available, i dont regret doing so at all........"


I think Martin has a fair point about helping the consumer get the best deal hence get advice then go to cashback site.... But the consumers should have also been made aware that, going down the information only/cashback route offers little protection in comparison to the advised route. As the adviser is responsible for his/her advice & recommendation (hence expensive professional indemnity cover taken out by brokers). Given that a mortgage is the largest financial transaction for the average person and the cashback is only a couple of hundred pounds for every hundred thousand pounds borrowed, a lot of consumers would probably rather have the protection.