"Whole of market" not quite so

The_Architrave

After having a bit of a look round at various lenders, I spoke to Charcol to see what they could do for me and, to their credit, they were completely frank about it the best deals being direct at present for someone in a straightforward position like myself, so kudos to them.

I have no association with Charcol or anything like that.

payless

The_Architrave wrote: »

After having a bit of a look round at various lenders, I spoke to Charcol to see what they could do for me and, to their credit, they were completely frank about it the best deals being direct at present for someone in a straightforward position like myself, so kudos to them.

I have no association with Charcol or anything like that.

thats great ... I'm interested was it without prompting.. ie did you call and they straight away told you to go direct, or was it that you said "I've seen XYZ " or "I've seen some direct deals"

The_Architrave

payless wrote: »

thats great ... I'm interested was it without prompting.. ie did you call and they straight away told you to go direct, or was it that you said "I've seen XYZ " or "I've seen some direct deals"

It was a couple of weeks ago, so I don't remember exactly how the conversation went, but I'm reasonably sure that I prompted them.

payless

well that would account for it then.. why would they waste time if they knewm they were on a losing side

Dan_Collins_2

FSA want this, they want us to charge fees and not get commission. Then again its ok for them to judge as they sit on nice salaries!

payless

At least that would be a transperant route...

A WoM broker only discussing better deals when prompted is not a good situation for anyone

HelpWhereIcan

payless wrote: »

At least that would be a transperant route...

A WoM broker only discussing better deals when prompted is not a good situation for anyone

I have to say that I feel that some customers don't care about what is transparent at all. Some only care about what appears to come 'out of their pocket' up front and ignore the long term costs.

I have always offered the customer the choice of paying a fee and receiving a commission rebate or me receiving commission from the lender. However, I have recently changed the way I deal with new customers.

I am upfront and explain that I offer a free 1 hour meeting, but if the customer wants me to look at specific deals and make a reccomendation I will charge a small fee (£150) for researching the market and reccomending a suitable deal for them.

My research will include all deals from all lenders and I will reccomend the 'best' regardless of what commission is paid. After all that's what the fee pays for. If the customer then wants me to administer the application for them, I charge a further fee based on an hourly rate but rebate all commission received from the lender (if they pay one).

As most people would apply direct for a direct only deal or the lender commission would normally cover both the advice & admin fee, the chances are the most someone will be 'out of pocket' is £150.

But... I am sure that they will have saved more than the £150 by finding the lowest cost deal with features, criteria etc most suited to their needs and having received some actual advice about mortgage rather than just information about deals available.

No wasting their own time - or their own money - applying for a direct deal when they would not fit the lender's criteria, it does not have the flexible options they want or forces them to open a bank account with someone they don't want to bank with.

Anyway, I received a phone call from a first time buyer wanting to book an appointment. She was looking for 95% and would probably get the lowest cost deal with a lender by going direct. However, her circumstances would mean that she should be aware of other things - higher lending charges, dangers of going interst only, the effect high fees have on the true cost of a low looking rate etc etc.

I explained how I work to her and how it would differ from the two other places she was planning on seeing:

1. the Halifax direct (no advice just info and compulsory bank account, high cost insurances) and

2. another local IFA (not mortgage broker) who proudly boasted having access to all lenders and being fee free :rolleyes: .

She booked an apointment with me, then cancelled it the day after having been to see the Halifax.

Her reason? According to my PA who took the message:

"The Halifax told me they were best for first time buyers anyway and I would have to apply now to get the rate. Besides, he charges a fee and I could get it for free with the Halifax."

Now I don't mind - kind of customer I could do without really. But I do think it illustrates the fact that the FSA and media need to educate the population about the need for advice before condoning dual pricing.

Dan_Collins wrote: »

FSA want this, they want us to charge fees and not get commission. Then again its ok for them to judge as they sit on nice salaries!

Until people realise what advice means and that it is something that has to be paid for, the power will be in the providers' hands... and where do the majority of complaints come from? Direct and bank sales forces.

The FSA want the banks' reps to be called sales and only independent advisers to be able to use the title adviser - the banks object. I wonder why. With mortgages, it suits them to offer an information only service and call the people who give that service advisers or 'mortgage specialist' or some other such obfuscation.

Martin needs to change his article to reflect recent changes and help people understand why they may find it harder to get genuinely free advice now and why firms who "talk the talk but do not walk the walk" may be the most dangerous of all.

homer_j_3

HWIC

I have had a similar conversation with my compliance team about offering advice on direct deals and I do charge £100 for researching which I refund if the deal completes or if I cannot help. I then take commission from the lender as remuneration.

Having decided that I wanted to offer advice on the direct deals, I was presented with the following arguments:

FSA require you to produce a KFI for any deal that you recommend. If you cannot get a KFI, how can you recommend?

How can you ensure that you cover all lender and all deals when some deals are exclusives to some brokers and how do you prove that you have covered all deals from all lenders.

The final argument was, is how can you advise on a product that you do not have access to the information of underwriting and criteria and what if the deal changes between your advice and them getting an appointment and they sign up on a different deal not realising it etc?

I am not being critical here of what you are doing but I am facing these arguments, which I believe are fair comment but whatever I say, they are not happy.

On a sep note, I saw a Mortgage Strategy article yesterday where the FSA have said brokers can make their own KFI's on direct deals. Anybody care to explain what they meant by this as I have a picture of a blue peter type exercise of printing off a kfi and sticking bits over other bits to make the KFI relevant lol! Here's one I prepared earlier type exercises.

HelpWhereIcan

homer_j wrote: »

HWIC

I have had a similar conversation with my compliance team about offering advice on direct deals ...
Having decided that I wanted to offer advice on the direct deals, I was presented with the following arguments:

FSA require you to produce a KFI for any deal that you recommend. If you cannot get a KFI, how can you recommend?

Potentially 2 ways

1. Produce a KFi from the lender's customer facing website, personalised for the client.

2. Use the edit function in Trigold to change a broker deal from the same lender and ensure that the rate, fees and ercs are correct.

Either way, advise the client to get a KFI from the lender to be checked over by you before signing any application forms. They are not withdrawing direct deals all that quickly

homer_j wrote: »

How can you ensure that you cover all lender and all deals when some deals are exclusives to some brokers and how do you prove that you have covered all deals from all lenders.

By using the likes of emoneyfacts combined with other pinks such as moneyfacts. Very unlikley that you will miss many (if at all). Lender direct deals are easy to find - we all know which lenders they are and all have sites. The Nationwide even provides details on their intermediary site.

homer_j wrote: »

The final argument was, is how can you advise on a product that you do not have access to the information of underwriting and criteria

Obviously a point made to you by someone who has never had any experience of broking. Lenders' criteria is the same direct as through intermediaries (other than notable exceptions revolving around LTV and/or Interest Only) - most lenders have affordability calculators on their customer sites and emoneyfacts tends to have an amount of criteria on. Post Office is Bristol & West, YBS is Accord etc etc.

Besides, a quick phone call is often all it takes for a broker to tidy up any grey areas of criteria.

homer_j wrote: »

and what if the deal changes between your advice and them getting an appointment and they sign up on a different deal not realising it etc?

Compliance for compliance's sake there. Put a section in your reasons why letter (which you give to them with your reccomendation) telling them to make sure they provide you with a copy of the KFI and, if you want, to have them pass the offer to you to check.

A very unlikely scenario as those most likely to pay for that kind of service will generally check the application info they are given anyway.

Many of these lenders will do the app by phone and so will send a KFI out with the application form to be signed. AFAIK, not even HSBC insists a customer has a face to face appointment.

If they do it all by phone, you can even sit with them while they do it.

homer_j wrote: »

I am not being critical here of what you are doing but I am facing these arguments, which I believe are fair comment but whatever I say, they are not happy.

Will depend on your network's compliance team I suppose. Worst case scenario you could always produce a KFI for the best deal you are able to, but then say to the customer

"If you go to XYZ direct, they appear to have such and such a deal. Get a copy of a KFI from them for that deal, come back and I will compare it to the one I've just given you one for."

homer_j wrote: »

On a sep note, I saw a Mortgage Strategy article yesterday where the FSA have said brokers can make their own KFI's on direct deals. Anybody care to explain what they meant by this as I have a picture of a blue peter type exercise of printing off a kfi and sticking bits over other bits to make the KFI relevant lol! Here's one I prepared earlier type exercises.

Use Trigold edit function or use the lender's own website to produce one and then use something like Acrobat to produce a copy with the relevant sections (non advised to advised, contact details, using an intermediary) I suppose.

Dan_Collins_2

The lenders do not want us involved in direct cases, that is why they are direct. The direct channels could not cope with broker cases, to many to fast.

I hate to say it but until the lenders want our biz we are shafted!