why you should REALLY support brokers

jediknightwarrior

homer_j wrote: »

I wish we had let the EU people put their no commission policy in place. It would have forced change to where the advice route needs to be.

I could not agree more homer. I was suprised we opted-out earlier this year. It would have solved a lot of problems.

BrokeRage

Homer, you make a lot of sense in your post, but the "No commission" option is naive in the extreme IMHO. If you go into a lender branch, or deal with them on the phone, their aim is to sell you one-provider protection deals with inflated prices, with the implication that this is part of the mortgage application process. The employees working for these lenders get paid. Brokers get paid for advising on, marketing and processing mortgage applications. The current situation is about encouraging consumers to deal direct with lenders whilst receiving no advice or professional scrutiny. Lenders would have everyone believe that brokers add nothing to the process because they don't want independent comparison and scrutiny, just a headline rate that "Sucks in the punters".

I can't speak for how other brokers operate (I have come across some pretty disgraceful attitudes and some really noble ones) but, for many, the motive is to get up in the morning and do the best deal they can for whoever they are dealing with.

Brokers are being painted as useless middle-men/women who earn commission for doing nothing. MM is simply making the point that they do add value to the consumer and commission simply replaces the cost that the the lender would pay for their own staff to market and process their products. It isn't "Bunce", it is payment for a job done and for taking on the compliance liability imposed by the FSA and by the risk of subsequent complaint.

It is all very well for sites like MSE to promote DIY mortgages (and I applaud Martin Lewis for his efforts to educate consumers), but if anyone thinks that lenders have the consumers' interests at heart, then they are mistaken.

I call it the "Superstore Syndrome" i.e. Build a store, cut prices to the bone, destroy small businesses in the area, then hike up the prices. Lenders have decided that the independent scrutiny of their products is not in their interests and are using the credit crunch to cut brokers out of the equation.

The future, if this situation is carried to a logical conclusion, is that consumers will have no real protection from an automated sales process and will have to do the comparisons themselves and hope that they are clever enough to spot the pitfalls involved in many mortgage deals. The other option will be to pay a broker to provide advice (if there are any left in the market).

Unfortunately, the natural assumption by the consumer is that they are smart enough to do it themselves. Maybe they are, but I thoroughly doubt it.

MortgageMamma

Is it me or are the majority of MSE members cynical and smug regarding the current situation?? Oooh lets stick the boot in on all those rich fat cat advisers who made a fortune out of us and now they are paying for it. Yep, ok, so we all know the stereotype you hold of advisers in your heads and it is true there are advisers who have done very well out of their profession. But let me clarify something. The majority of advisers earn a modest income, which in my opinion does not reflect the level of expertise we provide nor does it compensate us fully for the lifetime of liability we carry on our shoulders for the advice we give to you.

You can quote me on this if you like. The majority of the general public are short sighted and if they knew the truth of whats going on just now, you would be jumping up and down protesting as you, the consumer, are being compromised and treated unfairly by lending institutions and the regulator whose main purposes is "an independent financial watchdog".

The purpose of my post is to highlight the benefits of using a professional broker, and I am also taking action to ensure consumers know many things about the industry which will help them in their decision making until grey areas are addressed.

BrokeRage

As an aside, it is worth mentioning that the Financial Services Authority assumed that brokers would be comfortable with marketing higher-priced deals that paid commission. They were literally besieged with demands that brokers had to be able to access and assist with "Direct deals" even though they paid no commission.

Brokers asserted that they were required to "Treat Customers Fairly" under FSA regulation. I think that the FSA were a bit astonished by this reaction and honestly believe that Mortgage Brokers are commission-hungry middle-men. It is an absolute disgrace that the "Regulated" had to force the Regulator to consider imposing their own rules on mortgage lenders.

Think about it.....

MortgageMamma

perhaps some documentary proof of this might help let me see what links I can find....

MortgageMamma

this is a good place to start. This letter explains a lot of the issues surrounding the mortgage market at present - its aimed at professional publications so if any non professionals need clarifications of terminology please just ask.

http://www.ifaonline.co.uk/public/showPage.html?page=ifa2006_articleimport&tempPageName=793723

BrokeRage

cells wrote: »

IF TRUE you need not worry, but as i suspect it isnt really true and a lot of you will be broke soon

That, by the way, is smug and nasty. It indicates that the vast majority of your cells are located in an area nowhere near the brain!

MortgageMamma

BrokeRage wrote: »

That, by the way, is smug and nasty. It indicates that the vast majority of your cells are located in an area nowhere near the brain!

Don't get personal, they need to learn about this issue as its easy to be blighted with half truths and scare mongering from the press. the consumers need to see its not only our occupations were are defending but their rights to independent scrutiny and advice on mortgage and ancillary products. They will soon complain if our services are taken away, the market simplifies and there are no products to meet their needs (well, that they can find for themselves anyway)

BrokeRage

Point taken....it is just indicative of public attitudes. I have never put my own needs above those of my clients, so I get irked by that kind of comment.

Graeme7777

Hi,

My opinion is that some of the mortgage brokers have made a rod for the back of the rest of the profession by providing poor advice, chasing the most lucrative commissions and by being ill-informed. It seems to me that mortgage broking is an industry with relatively low barriers to entry and fairly generous prospects. This suggests to me that this career will attract a lot of what one could call the "hard sell brigade".

I've always maintained that any job that pays staff solely on commission (I know that not all brokers are paid like that) can lend itself to abuse because the incentives exist for staff to sell as much as possible with little regard for the best interests of the customer. You only need to look at many of the job advertisements for brokers to see this: "ARE YOU A CLOSER!!!" etc. No mention is made of whether the applicant can help the borrower choose the most appropriate product to finance what is likely to be the largest purchase of his or her life.

This is a great pity I think as I believe that brokers can - and do - add a lot of value for many borrowers. And if they do that then good luck to them - they deserve to earn decent money like the rest of us who try to do a good job.

Let me say that I don't like to see anyone lose their livelihood so I wish all brokers well and I hope that they can ride out the current difficulties. There are quite a few people on this site who are VERY generous with their time and knowledge, with no reward other than the satisfaction of helping someone, and I especially wish you well.

Cheers!