should whole of market broker charge the client?

amnblog

SavingSteve wrote: »

It is very much in the advertising.

"Fee free" = somewhere in the mortgage illustration it is quoted that I am paid by the lender, including how much. But I don't make it clear to you, you can find it for yourself if you want.

If the broker is not charging you a fee - that is fee free is it not?.

What the broker is paid by the Lender is immaterial to you if it does not affect your terms.

SavingSteve wrote: »

"One off lifetime fee" = I get paid a fee once and want you to think you have a huge bargain on your hands, whereas really what this means is I have you on tap for all the commissions forever, which again are in the KFI, but I'm not going to make them obvious.

A lifetime fee is a concept I do find baffling. Pay now and I will service you forever. No matter how the world changes? Even if I shut my business down? No matter how often you need help?

SavingSteve wrote: »

"Fixed fee" = Makes it look like the Broker has no incentive to angle you towards a lender that pays higher commission rates, but that is not true, as the fee is fixed but the commission varies based on lender selection.

If a broker were doing this he would soon be out of business. As KS says it makes no sense at all.

By the way - the offer for the client to pay a fixed fee and have procuration fees refunded to them is necessary to enable a broker to use the 'Independent' tag.

SavingSteve wrote: »

if the difference in broker remuneration between different options were made clearer to the borrower it would help towards pushing unscrupulous brokers aside.

Nonsense - illustration document is already far too complex.

SavingSteve wrote: »

In short, there is disclosure (ticking the regulatory box by putting it in the KFI) and then there is the marketing spiel. It is the latter I have issues with.

Both are regulated.

You would find is easier to export food poisoning from a dirty kitchen and stay in business that you would try to circumvent the regulations and keep trading in mine.

SavingSteve

Whilst I am sure all of the above is correct I am just sharing with you one consumer's view. Take it, ignore it, it's your call, but many are skeptical of brokers for these reasons. More transparency can only help to reduce the skepticism.

David_White

In this world you tend to get what you pay for.

ACG

I have put Nationwide in instead of TMW as TMW only do BTLs. It is not comparing like for like. As TMW is Nationwides BTL arm, it seems the most logical replacement.

Nationwide - 0.35% (£350 on a £100,000 mortgage)
Coventry - 0.43% (£430 on a £100,000 mortgage)
Natwest - 0.35% (£350 on a £100,000 mortgage).

I do not have access to HSBC/First direct so I have just replaced them with a lender I seem to be using a lot at the minute.

Lets assume the average mortgage is £110,000*, you are saying the difference between the lowest and highest is £88. Lets assume the average broker does 50 mortgages a year. Thats a total of £4400 difference.

Part of the reason I charge fees is so that I earn a decent amount per case. That means £88 to me or £4,400 a year is not enough to risk me losing my livelihood. Financial services in general has a bad reputation, but honestly how often do you hear about local advisors or any advisors ripping off clients?
- We do not hold your money,
- at least part of our income is only paid if you get your mortgage (ie the commission)
- and most of us work for ourselves or small businesses that rely on repeat business and refferals.

Its not good business sense to do something stupid for an extra couple of quid.

On a side note, my costs are about 15% of income so £4400 becomes £3750. The tax man then gets his 20% so it then becomes £3k.

I have also just realised, when I write my clients a letter at the end to confirm what has been recommend and why. I have to list the lenders individually by name who had lower rates and put a quick explanations as to why they were not chosen. Commission paid would result in me being castrated.


*I have just added up all of the various areas average mortgage size and divided by 11 (areas) from this page http://www.thisismoney.co.uk/money/mortgageshome/article-3438660/The-regions-biggest-mortgage-debt-revealed-Use-interactive-maps-town-city-compares.html