Being my own IFA

Fred

Hello, I am one of these best-rates people who tries to keep on top of the game by remortgaging every once in a while to chase a better rate. My latest example is a mortgage through an online broker, where the broker got 500 pounds commission. I wonder how can I get my hands onto this money. Two scenarios:

1. Mortgage for myself. I walk say into Nationwide and sign up with them. Nobody - except maybe for the branch - gets a commission. If I ask a FA to bring the forms in, he gets a couple of hundred. Why, if I do all the work, track the market, fill in the forms, should I not get the commission?

2. Mortgage for a good friend. My friend wants to remortgage and I know a good deal that suits him just fine. I help him fill in the forms, and deliver the forms to said Nationwide branch. Same rule as in 1 applies even though I have effectively done all the work.

Scenario 2 brings me close to being a FA, which I do not want to be as I like my job. But scenario 1? I have yet to find a competent broker, and my last deal was no exception as I had to do everything myself - by this I also mean challenge an incompetent valuation and make the lender offer a higher mortgage. That's much more than simply fill in forms...

Fred

dunstonh

1. Mortgage for myself. I walk say into Nationwide and sign up with them. Nobody - except maybe for the branch - gets a commission. If I ask a FA to bring the forms in, he gets a couple of hundred. Why, if I do all the work, track the market, fill in the forms, should I not get the commission?

You need an agency with the provider to be paid for business. To get an agency you have to hold the correct licence for that class of business. In this case you are talking about mortgage advisors and not financial advisors.

2. Mortgage for a good friend. My friend wants to remortgage and I know a good deal that suits him just fine. I help him fill in the forms, and deliver the forms to said Nationwide branch. Same rule as in 1 applies even though I have effectively done all the work.

Technically, you would have broken the law by recommending the mortgage to your friend. If you dont earn from it, there is very little chance the FSA could do anything about it, unless you do it a heck of a lot. If you earned out of it then its a different matter as you would be in effect acting and being paid as a mortgage advisor without the necessary licence and qualifications.

In the old days, getting an agency was a doddle. Nowadays, you have to be regulated by the FSA. That usually stops the casual enthusiast because of the costs associated with being licenced and the financial requirements and paperwork involved.

So, if you drop the forms in yourself, the lender (or branch as the case will be) says thank you very much, thats another one off our sales target this month. If you go to a mortgage advisor, you could negotiate the terms of a split commission/rebate. Much the same as you would expect on execution only business with an IFA.