Fee Free Brokers to be a thing of the past?

Tiddler_2

I know this site suggests using fee free brokers such as Charcol and L&C, but I've heard a whisper that the proc fees paid to brokers by the UKs no1 lending group are about to be reduced, though to what level I'm not certain.

Charcol are already reported to have had financial problems, and are looking for more funding.

Will this lead to the end of fee free brokers?

dunstonh

I know this site suggests using fee free brokers such as Charcol and L&C

You mean Martin suggests it in his article. That is an opinion and not necessarily the right one. There are times when fee basis can be cheaper than commission (which is all the fees free option is).

Will this lead to the end of fee free brokers?

Wouldnt be a bad thing. Ask me years ago the same question and I would say it would be an awful thing to happen but having taken the plunge to go fee basis myself I can only say I get more business now than ever before.

It will be scary for some broker/advisers to go fee basis and it wont work with some business models but it will work for many. Especially if they extend the fee option to include life assurance, PHI etc. That will also benefit the consumer as well.

payless

Consumers need to realise the options are

Commision only ( often calleed fees free)

commission + fees

Fees only ( commission all rebated in full)

Theres also commission only with a % rebated

The final 2 can work out cheaper - 3rd especially in larger cases , but don't think its mentioned in Martin's articles at all

poppy10_2

Cheapest is to use a fees-free broker and then go directly to the lender.

Shhhhh.......

Tiddler_2

Think you missed the point of my post.

Lenders are likely to reduce the commission they pay brokers (very shortly according to my sources!!) This will lead to brokers' commission income reducing possibly quite substantially, and it will be the fee free brokers who will obviously feel this most.

Personally, like dunston I think it would be better if these commissions were withdrawn completely and brokers just charged a fee, but that would lead to
more upfront fees for customers

TEDDYRUKSPIN

To pay or not to pay, that is the question?

Being honest, if you opt for fee free basis, the IFA will just scout the lenders that provide them with commission. Credit crunch? Probably none now.

Ha.........................

Why should'nt an IFA charge people? They should! Nowadays they get hardly anything from the lenders for commission. Better to charge and the customer will obtain a fuller picture.

jediknightwarrior

I'm totally for fee based advice.

The only problem I can see is how do you get direct only lenders to provide KFI in order to make a recommendation? As I understand things, no KFI prior to making a recommendation equals uncompliant sale.

Dan_Collins_2

poppy10 wrote: »

Cheapest is to use a fees-free broker and then go directly to the lender.

Shhhhh.......

Thanks for the support poppy, glad your not one of my clients!

Fee free should in theory be cheapest but I can see OP's post. If like HBOS proc fees are cut and further it may happen.

Also I have noticed that a lot of the direct deal the likes of Abbey and Halifax are offfering cannot be obtained by a broker, proc fee or not!

Ian_Griffiths_Halifax

One of the main problems with using Non-Fee Charging Brokers is, you have to wonder where they are earning any money from to justify the cost of processing an application. I have yet to come across a company who does not charge a fee without trying to force feed Life Assurance and other protection products to the client, even if they don't need them. Also, how can they possibly offer the deals of the lenders who pay little or no procuration fee (Commission)?

Many of these brokers do not give advice and so they are not liable if you have a complaint about the product you end up with.

In the entire house buying/selling process, an Estate Agent costs you money, a Solicitor costs you money, a Surveyor/Valuer costs you money, the Bank/Building Society costs you money, but it's the Mortgage Broker who saves you money and yet it is the Broker who seems to be getting the stick regarding paying him.

Something seems a bit unfair here.

I have had to edit my posts to show that I am a mortgage broker. I have put this in my signature in my personal profile, but it has not shown on here.

As this is my first post, I'll find out how to get it to show, but I didn't want anybody getting the wrong impression.

Edinburghlass_2

If you post again, you'll find your signature should show now

dunstonh

The only problem I can see is how do you get direct only lenders to provide KFI in order to make a recommendation? As I understand things, no KFI prior to making a recommendation equals uncompliant sale.

You get the KFI posted to you or direct to the client and ask them to bring it in to you so you can put a copy on file.

One of the main problems with using Non-Fee Charging Brokers is, you have to wonder where they are earning any money from to justify the cost of processing an application. I have yet to come across a company who does not charge a fee without trying to force feed Life Assurance and other protection products to the client, even if they don't need them. Also, how can they possibly offer the deals of the lenders who pay little or no procuration fee (Commission)?

You make that sound worse than the banks which have the worst complaints stats with the FOS than any other distribution channel. So bad that the FSA has proposed that tied agents will not be able to use the term "adviser" in any titles from 2009. The bank's insurance products are oversold, expensive and often low quality. I spend a lot of my time sorting out bank sold products and putting people in much better things. Halifax and Lloyds are the two worst offenders.