What do you expect from a mortgage broker?

MortgageMamma

Hi All

Since we have had a lot of talk on here lately about fee's I am interested to know what would you ideally like from a mortgage broker?

Please vote on the poll

1. No fee's whatsoever and access to all lenders who pay commission, research excluding lenders who do not pay brokers commission

2. No fee's whatsoever and the broker to look at all lenders regardless of whether they are paid commission by a particular lender

3. A small fee to include lenders who do not pay commission in research, which is then refunded if a commission paying lender is chosen

4. Hourly fee's upfront to include ALL LENDERS, commission paying or not
then having all the commission rebated to you on completion

MarkyMarkD

Interesting question, MM.

Now here's a related one which I'd appreciate your view on. It's particularly relevant to your option (3) I think, but also affects the brokers in categories (1), (2) and (4).

How do brokers cope with lenders who offer products which are not available via intermediaries? Do they include them in their research, even though they don't come up on their sourcing systems?

Or do they ignore them either innocently, because they are not aware of them, or intentionally, because they won't earn a fee on them?

I have a specific example in mind, where the difference in the cost to the borrower could be c.£1,000 - way less than the procuration fee "lost". The problem is that a "no fee" broker has no incentive (other than the requirement to give best advice) to recommend the product, even though the borrower could pay the equivalent of the procuration fee themselves and still be £500+ up on the deal. And then again, the problem for the broker is that once they tell the customer about the aforementioned deal, there's nothing to require the customer to pay up anything at all.

What do you think?

(BTW I've answered (3), but it's really a modified version of (3) as I'd expect the broker to recommend the direct-only product in the circumstances I describe above but for me to pay the agreed fee for the advice).

MortgageMamma

MarkyMarkD wrote: »

Interesting question, MM.

Now here's a related one which I'd appreciate your view on. It's particularly relevant to your option (3) I think, but also affects the brokers in categories (1), (2) and (4).

How do brokers cope with lenders who offer products which are not available via intermediaries? Do they include them in their research, even though they don't come up on their sourcing systems?

I personally subscribe to moneyfacts, and check the websites of the non commission paying lenders once a week. There was a time when they came up on sourcing systems but that seems to have stoppped now.

Or do they ignore them either innocently, because they are not aware of them, or intentionally, because they won't earn a fee on them?

Not something I do, I know some do though. Again legislation has failed us with this one, Whole of Market should mean exactly that. For a long time now I've wanted the grey area removed and clearer meanings for consumers. i.e. panelled, single provider or truly WOM, not panelled but calling themselves WOM.

I have a specific example in mind, where the difference in the cost to the borrower could be c.£1,000 - way less than the procuration fee "lost". The problem is that a "no fee" broker has no incentive (other than the requirement to give best advice) to recommend the product, even though the borrower could pay the equivalent of the procuration fee themselves and still be £500+ up on the deal. And then again, the problem for the broker is that once they tell the customer about the aforementioned deal, there's nothing to require the customer to pay up anything at all.

I think how this is dealt with depends very much on the individual broker, their principles and integrity and how much they need the business. However I do think if one is to call oneself whole of market one should not mislead a consumer by not including the non commission paying lenders. Then you have to think though, who is more at fault, the broker who does not include non commission paying lenders in research, or the lender who won't pay a broker a small amount of commission?

What do you think?

(BTW I've answered (3), but it's really a modified version of (3) as I'd expect the broker to recommend the direct-only product in the circumstances I describe above but for me to pay the agreed fee for the advice).

Thanks for your vote and opinions MarkyMarkD, appreciated.

MM

dunstonh

What do you expect from a mortgage broker?

... be able to make a good cup of tea and good with all the filing to let the IFA get on with the real business

I better get the armour plating ready!!!

Real answer. To treat customers fairly, give excellent service and charge if necessary but appropriate levels for the work done.

MarkyMarkD

MM

Thanks for your reply.

I was particularly talking about lenders who are generally commission paying, but who offer direct-only products as well. Do your answers still hold in these circumstances? And how would you find out about such products?

I think your comments about who's at fault are interesting. I think the whole fee/commission structure thing is at fault, to be honest - there's nothing inherently wrong with non-commission paying lenders, as they should be able to offer more competitive products meaning that a customer paying a fair fee should be as well off as buying a less competitive product but not paying a fee (because the broker survives on the commission). I think that your comments support the view that you cannot blame the lenders for offering good value products and then not getting recommended by a morally dubious broker who doesn't look at the whole market - that's the broker's choice. But equally well if their products don't appear on sourcing systems, because they don't pay commission, or the products are direct only, how can a broker fairly be expected to consider them?

payless

But does eveyone really know the full market

http://forums.moneysavingexpert.com/showthread.html?p=5066914#post5066914

MortgageMamma

Whats your point payless?

AndyWallace

Just read the results of the postings so far and am not surprised.

But honestly, no established broker will recommend a non-paying lender without charging a fee for his / her time.

People taking professional advice should expect to pay for the advice.

MM.

Colin has a good point there.

MortgageMamma

MarkyMarkD wrote: »

MM

Thanks for your reply.

I was particularly talking about lenders who are generally commission paying, but who offer direct-only products as well. Do your answers still hold in these circumstances? And how would you find out about such products?

Its got to be said the marketplace is absolutely massive but such products are often marketed on best buy tables and on websites such as moneysupermarket and moneyfacts. The way I work it is I search from whats on trigold and come up with the best option and then I have a look over the direct deals and see if there is something more competitive. Like any other broker I don't like throwing business away and that it one of the reasons I have started this poll. However, I do think that non commission paying lenders/direct deals from commission paying lenders should be included on sourcing systems

I think your comments about who's at fault are interesting. I think the whole fee/commission structure thing is at fault, to be honest - there's nothing inherently wrong with non-commission paying lenders, as they should be able to offer more competitive products meaning that a customer paying a fair fee should be as well off as buying a less competitive product but not paying a fee (because the broker survives on the commission). I think that your comments support the view that you cannot blame the lenders for offering good value products and then not getting recommended by a morally dubious broker who doesn't look at the whole market - that's the broker's choice. But equally well if their products don't appear on sourcing systems, because they don't pay commission, or the products are direct only, how can a broker fairly be expected to consider them?

Again this comes into the time/money equation. I personally feel that if ALL mortgages available were on the sourcing systems it would be much fairer on both the clients and the brokers. That way if a direct deal is most competitive the broker hasn't spent hours and hours trawling through lender websites to come to that conclusion and can let the client go at less of a loss to themselves.(that is, assuming they do not charge a fee). Also, it would also increase business on direct channels for lenders which would be good for them. One other thing to consider though is if this happened it would change the culture in which brokers work, I expect there would be a lot less willing to work on a fee's free basis. I'm not sure if this is a good or a bad thing - I guess I'm sitting on the fence on this for a while

Thanks again for your comments MMD, what basis do you work upon? I'd like to see the opinions of some none brokers on here too

MortgageMamma

AndyWallace wrote: »

Just read the results of the postings so far and am not surprised.

But honestly, no established broker will recommend a non-paying lender without charging a fee for his / her time.

People taking professional advice should expect to pay for the advice.

MM.

Colin has a good point there.

Thats the whole problem, I dont get the point! Could someone explain?

payless

The point is a broker can only know so much ... even with the reserach tools we all have.

The link was an example whereby a lender had a deal direct that you ( and this was coincidence, before going back to thread I could not remember which broker it was) thought that lender would not even lend to that class of borrower, because they don't in the broker market but do in the direct market.

Recently I have seen deals specially for current account holders , available directy but not via brokers ( so would an adviser have to find out the applicant bankers first, and then send them direct) , similiar story with "supporters " of a particular football club.

On the reverse brokers often get special exclusives via clubs which are often better then branch deals , but some brokers may get different ones to others at times ( perhaps because of volume they send ).. so do we need to say .. I can't get this , but if you go via XZY brokerage you currently get £100 off the valuation , or YZX brokers and get a rate 0.01% less .

I do have a service level to tries to cover this, but its not an option people seem to take up front

I feel that so long as people are not given mis information , and are told that the broker is sourcing from the deals in the open market avialable to intermedaries thats enough .

That said over the years I have sent a number of people direct ( for free) to certain lenders for special deals / different lending criteria when no comparable product is available to the broker market ,

(although I guess we still do the "no commission business " on a regular basis , when people come for a rate review and existing lender is best- and usually no commission)


Some have thanked me
Others have come back and said .. great rate, but not great dealing direct
Some you know just use you
Most have actually become long term clients , one in mind 8 years ago ( sent direct to a short lived really good 100% deal) has since done 3 other mortgages with me.

BTW my very post post on MSE was about this point, so 4 years down the line its obvious things have not changed