Independent, Whole of Market or Panel

MortgageMamma

Shouldnt you know that? you have a mortgage company! or have I misread that

JoeK_3

homer_j wrote: »

maybe you think I am in a world of my own by thinking that but I believe that its not fair for a client to pay for advice - simple as.

I dont buy your argument that fee charging eradicates commission bias nor do I believe that it provides a better level of service.

Thak's for that Hommer but the UK mortgage market is huge and your point of view is geared to your experiences only.

Hence the need for the FSA.

JoeK

homer_j_3

and your point of view is not?

My experience comes from many different sources which are not just limited to my time of advising.

Having looked at the lenders that I have used so far this year - I have used almost 32 different lenders out of about 48 cases done.

I appreciate your stance JoeK - I choose to use the correct lender for my client regardless of proc fee. Yes I will sometimes choose one over another because of customer service - however - I don't even look at the commission before finalising my recommendation. Its the way I work and I will continue to work.

This week I have had leaflets from brokers charging 1-5% of the loan.

Tell me how they will get better advice than someone who charges nothing?

The proc fees on mainstream differ minimally and if the client has paid a fee - how would they be worse off by some dodgy broker decides to take an extra £50 in proc fee?

The proc fees on adverse cases are higher but if you find your broker has taken an extra few hundred quid in proc fees because they are unethical - how can this be any worse then when you offset the fee you have charged?

A lot of adverse lenders now are moving to cascading underwriting to combat brokers placing on the incorrect schemes because of the FSA rules. So, going forward there will be very little to gain by charging a fee because you will only get the choice of which product you want at a certain risk level with a lender and the risk of an adviser say choosing a higher risk level because they didn't want to put them in at a lesser one which paid less commission.

JoeK_3

Hommer I think that you're missing the point. It's not my point of view but the regulators.

I have posted this as a debating point not to try and instill my views on anyone else.

Stop being so protective and keep submitting your views.

JoeK

homer_j_3

I am debating the question that you asked.

I feel that you should be fee free and should be able to give advice without charging a fee or being biased towards commission?

You are saying that this cannot happen because of what we know happens in the industry.

I have said that I feel that it can and that its not all black and white as the regulator makes it out to be. Fee based does not get rid of bad advice. It is to my experience that it has brought more brokers to the market - using more limited panels with bigger kickbacks and charging a fee on top.

JoeK_3

homer_j wrote: »

You are saying that this cannot happen because of what we know happens in the industry.

I am implying that in the real world, it may not!

Hence the need for the FSA!

JoeK

homer_j_3

it may not Joe - there are people out there that will only use a handful of lenders because they know its easy money and will never be far enough out for anyone to complain successfully that it was incorrect advice.

What does the FSA do to stop this? How do they ensure that this does not happen?

JoeK_3

homer_j wrote: »

it may not Joe - there are people out there that will only use a handful of lenders because they know its easy money and will never be far enough out for anyone to complain successfully that it was incorrect advice.

Hence the title, Independent, Whole of Market or a Panel.

JoeK

dunstonh

It is certainly true that the number of providers used on the IFA side is dropping. Mainly due to so many closing their doors to new business and mergers. However, I used 17 providers last year but what was noticeable that many that I used 3-4 years ago were not present last year and others moved in. If you have a panel that is too small, then you may get away with it for a while but you will always have times that you will not be able to offer the best option.

As for fees, I think the hybrid option is fair and it is one I use on investments. By that, you agree a fee and use the commission to offset it. Any commission above the fee gets rebated and if there isnt enough, the client pays the difference. Commerically, that means you dont waste your time dealing with uneconomical cases and clients with big mortgages get something back and its often those that give you the most referral business.

JoeK_3

Thanks, dunstonh.

I think that the hybrid would be the ideal choice for the FSA, if known, that way the adviser would not be influenced either way.

What are your opinions about giving advice on protection products, agreeing to be paid on a commission over a 4 year period, only to find that the client has lapsed the policy and arranged one with another adviser.

Or does that only happen to me?

JoeK