Problem with Mortgage broker negotiating fee half way through

betmunch

Conrad wrote: »

You can - this point was made at an FSA conferance I attended. Client can walk away of course.

Thing is there can be a lot more work involved than you first anticipate - one thing leads to another and before you know it a 6 hour job turns into a 30 hour monster.

I know how much work can be involved. I didnt realise you could just change your mind about your fee structure after giving an IDD!

It makes a mockery of the disclosure if you ask me!

magpiecottage

Thrugelmir wrote: »

The complaint in this instance should be against the broker not the lender, hence the FSA not FOS.

Wrong again - ALL individual complaints about business regulated by the FSA are considered by FOS.

The FSA does NOT deal with individual complaints.

Take a look here for examples of complaints against mortgage intermediaries dealt with by FOS.

Leon_W

As someone mentions above, a seemingly straightforward case can quickly become a complicated nightmare and a broker is well within his or her rights to decide to charge a fee. The important bit is that you have to be issued a revised IDD with the fee listed. No new IDD, no fee.

Regards

Conrad

betmunch wrote: »

I know how much work can be involved. I didnt realise you could just change your mind about your fee structure after giving an IDD!

It makes a mockery of the disclosure if you ask me!

Not at all. If a builder quotes for a job and then finds extra work involved, for example due to an underground pipe in the way, he can rightly request a new price.

If a Nurse has to work past her shift end time due to a complex emmergency she can claim overtime.

If a cabby gets stuck in traffic and has to divert, he charges more.

Why on Earth should a broker be any different? It is often impossible to forsee the dominoe effect where one item leads to others and the work load massivly increases. As long as you point out at outset that the fee reflects the expectations of all parties, then fine.

It's not something you would do as a routine part nthere are occasions when it's perfectly justifed.
DISCLOSURE is not a bar to following standard business practices.

Some people would expect you to stick to a fee but I can guarantee those same people would quickly want overtime if they had to put in extra hours in thier own job!

betmunch

Conrad wrote: »

Not at all. If a builder quotes for a job and then finds extra work involved, for example due to an underground pipe in the way, he can rightly request a new price.

If a Nurse has to work past her shift end time due to a complex emmergency she can claim overtime.

If a cabby gets stuck in traffic and has to divert, he charges more.

Why on Earth should a broker be any different? It is often impossible to forsee the dominoe effect where one item leads to others and the work load massivly increases. As long as you point out at outset that the fee reflects the expectations of all parties, then fine.

It's not something you would do as a routine part nthere are occasions when it's perfectly justifed.
DISCLOSURE is not a bar to following standard business practices.

Some people would expect you to stick to a fee but I can guarantee those same people would quickly want overtime if they had to put in extra hours in thier own job!

Since you put it like that I get it.

I retract what I said about the disclosure then.

I learn something new every day!

magpiecottage

Leon_W wrote: »

As someone mentions above, a seemingly straightforward case can quickly become a complicated nightmare and a broker is well within his or her rights to decide to charge a fee. The important bit is that you have to be issued a revised IDD with the fee listed. No new IDD, no fee.

Simply issuing a new IDD and forcing on on a customer half way through the process will almost certainly be interpreted by the FSA and FOS as unfair unless the option to do it was specifically disclosed at outset.

I would anticipate little sympathy for the broker from them as it would be considered as a commercial risk and she should budget to offset the extra time cost on such a case against the easier ones or negotiate an hourly rate at outset.

Conrad's arguments about other occupations are irrelevant because they are not regulated by the Financial Services Authority.

For the record, the builder who quoted for a wall in our garden DID invoice us for the price he quoted despite a considerable increase in the cost of the reclaimed materials between quoting and doing the work (we chose to split the difference with him and he has done other work for us since).

betmunch

So are we saying that unless the IDD specifically says that fees may be increased for complex cases they cant be changed?

Such a fuss over this makes me glad I am employed rather than SE!

Leon_W

I am sorry magpie but you are wrong.

Many things can happen with mortgage applications.

For example, a client may want a £100k mortgage for which I may not charge a fee, I get half way through the application and the client changes their mind as they have come into some money and now only want £20k. There is no way in this world that I would do a mortgage for that size without a fee as the commission, gross, would be about £60. Out of that has to come marketing, travelling (I'm mostly face to face) office costs, compliance costs etc etc. A fee would have to be agreed (and another IDD issued) if I were to continue working for the client on that basis as I am not a charity. Of course the client is free to go elsewhere if they don't.

Issuing a new IDD is perfectly acceptable.

As we know it has to be issued at the outset (I issue my fee free one) as I haven't even done the fact find yet so how can I know how complicated a case will be !

If after the fact find it's going to prove more difficult and time consuming then I have to charge a fee (or join the list of failed businesses). At which point I have to issue a revised IDD with all the fees listed for the client to consider, it's up to them whether they accept it or not.

regards