An Open Letter To Mortgage Brokers.

silvercar · 1 December 2008 at 10:25PM

JF77 wrote: »

By the way, if you only want to quote part of someone's post how do you do that? I'm a bit blonde ha ha!

Click on the quote button, then delete the part you don't want to repeat out of the message box.

dunstonh · 1 December 2008 at 10:30PM

By the way, if you only want to quote part of someone's post how do you do that? I'm a bit blonde ha ha!

Or left click and drag your mouse over the text you want to copy and right click and select copy in the menu (or press ctrl C) then come back to the message box and right click and select paste (or ctrl V). Then select that bit of text and press the speech bubble above the message box (it says wrap quote tags... if you hover above it)

That sounds a bit complicated but can be useful when you want to copy and paste a selection of quotes and answer sections at a time. Like this...

Proves you are vain.. I was talking about Dom Littlewood

I thought you meant Mini-me from Austin Powers.

jamesd · 2 December 2008 at 10:46AM

minimike2 wrote: »

But you MUST be qualified AND regulated to offer "advice" on mortgages.

It's not as simple as that.

Recommending that a first-time buyer consider a fixed-rate mortgage (but without mention of a specific product provider) is not treated as regulated financial advice. However, recommending that a current mortgage holder switches to a fixed-rate mortgage (again without mention of a specific product provider) is regulated financial advice. (Thoresen Review of Generic Financial Advice, Annex 2 paragraph 5.4)

But do note that that is in the context of individual advice in the course of a business activity. The product being left is the specific product from a specific provider when individual advice is being given.

There's also the general situation that:

"4.10 Deciding whether a person giving advice must be authorised by the FSA is determined by applying four tests:
• Is the provision of advice carried on in the UK?
• Is the advice given by way of business?
• Does the advice relate to a specified investment?
• Does the advice relate to a specified activity?
4.11 All four tests must be met to require FSA authorisation.."

I've yet to see Martin fail to use careful wording to ensure that while his business clearly meets the first two tests, he won't meet both of the second pair.

The result of this is that unregulated individuals, not acting in the course of a business, are entirely free to recommend specific products from specific providers, while professionals may well not be so free, particularly if they choose to be cautious. Pub and message board chats by consumers are entirely lawful and not subject to regulation (except for certain illegal activities relating to stock markets).

Section 7 of the document may be more problematic for Martin, since his business collects commission (referral fees) for acts that could be taken to be introducing people to comparison web sites. I assume that he has obtained and follows individual legal or FSA advice on this subject. A consumer, not acting in the course of a business, would have no such concern. If Martin reads this I'd be interested in knowing the legal reasoning that ensures his business is safe, out of curiosity about the regulatory boundaries rather than any belief that anything improper is being done.

Den · 3 December 2008 at 1:10AM

I don't want to be rude, but this post again another negative point for brokers. People should read and think, this site helps. I imagine that brokers are gutted that people can share information about deals and costs of products and fees they paid, using the Internet. So chances are MUCH LESS now that customers will be ripped off by brokers, and missold wrong products. Because of sites like this we can gain INFORMATION: mortgage cashback, whole market brokers, remortaging to get better deal.

I think if you are good and run your business with honesty - you will get customers! But if a broker ripping it's customers for many years and now afraid of loosing a job, then maybe it's time to review the way to deal with customers.

Huge THANKS to Martin, this site, it's members!!!

arkie wrote: »

Martin...
you are missing the point totally, as a broker I get people ringing me up saying they want a certain type of mortgage because that money saving fellow recommended us to do it. These people think you are qualified to give advice, as you will be aware that to be giving mortgage advice or what can be seen as mortgage advice you have to be regulated by the FSA. I have taken time to write to the FSA about journalists talking about mortgages as I feel that after over 20 years in the industry I want to protect my industry and my client from bad advice. PLease remember Martin please look upto you and some are foolish enough to believe everything you say. 3-5 months ago you were 'advising' people to fixe their mortgage, fix thier gas bills !!!! now you are telling people to 'ditch the fix' ,.
You should have a diclaimer stating that you are NOT qualified to give advice when you appear on the radio /tv.
As Ive posted before Martin if you want to give advice get qualified and get regulated to give advice. Put you money where you mouth is

Den · 3 December 2008 at 1:22AM

Chez_Guevara wrote: »

I think therefore the message to everyone (which I'm sure Martin would agree) is DO YOUR RESEARCH. It never fails to surprise me how many of my clients trust me blindly with whatever I tell them - fortunately, I have never (and will never) abuse that trust, even if it means my business hitting the wall. But the temptation must be there for some brokers, in dire financial straits, with lower morals than me!

This is exactly what I tried to underline in my previous post. Some brokers use unprepared customers. It's so hard to find the one you trust.

ADoc · 3 December 2008 at 1:36AM

May I please offer some views that may have been overlooked? Please note these are not advice! I am not registered to give investment advice :rotfl:

SHOULD THIS WEBSITE BE GIVING EVEN DIRECTIONAL VIEWS ON WHAT TO DO?

Legally, the website needs to beware, as regulations are not 100% clear. Telling people to buy something because it's a good deal can backfire. "Buy tech funds" is an obvious and fairly recent example, and even journalists have responsibilities in this regard.

But hey if Martin can find some deals that people should be AWARE OF and CONSIDER, then that's useful. Of course it is. If he can find us a £1 DVD or a 99% savings account from LloydsTSB, then whoopee (though we should all consider the alternatives, because some aspects of the service may not suit us).

TO FIX OR NOT TO FIX?
My point concerns fixing gas tariffs or interest rates. Or buying stocks because they're "cheap". Or selling something because it's expensive. These are VIEWS on the financial markets that people are taking. And quite often these views might turn out in retrospect to be erroneous.

Example: Mortgage fix

If you take a fix you will find that the variable ends up lower some of the time. Conversely, if you take a variable, you might end up paying more. As I understand it, over time the fixed rate works out more expensive much of the time, but you get peace of mind. It's worth paying a high-ish rate if you really need certainty. BUT: you can't have it both ways. You can't get a fix that is always cheaper than a variable. So you locked in to 5% for 5 years and base rate goes to zero? Tough I'm afraid - but at least you can budget. Who knows? Base rate might be 20% in 2010...

Things they don't often tell retail clients (these are related or even the same thing!)
Retail clients are suckers
Buy high sell low is not a good idea
Financial markets drive product prices (if the fix is at 5%, it's at that level for a reason - ask the bank or IFA what the "wholesale swap" rates are, they should know)
BUT
Retail generally has an implicit "put option" (ie buying out of the contract if it's truly awful and leaving the provider with the headache)
Life is too short to risk ruin - read Charles Mackay for good illustrations of how people have ruined themselves through the ages via speculation

Readers of this website might do well to bear these maxims in mind.

For what it's worth, my personal view on brokers is that they often gravitate to the best commission rather than the best deal for the customer. THERE! Scold me. Happy to listen and defend or change that position via debate.

Thanks

Stonehouse_2 · 3 December 2008 at 1:50AM

Imporant note: I am a regulated mortgage broker, and the coments below do no constute any advise of anytype, but smply a personal view based on having read the diffrent comments in this thread.

Dear Martin,

Firsly I am sad and very disapointed on the threats that you have recieved- while being ashamed that mortgae brokes who should be workig towrds being profesionals in same category as solictors and accounants have managd to act like borred children.I also promie you that any competant mortgage broker will be too busy looking after their clients (especialy in curret climate) to be woried about the advise/guidence you have given on your site.

Secondly may I comend you on your very informative, and useful website. I am a fan of your money saving tips. Well done to you and your team for this great work.

Thirdly and lastly I disagree with allot of the commnts in this thread so I list below all my diffret points of clafication, and please I would be more than happy to be corrcted.

1- It is a general problem that allot of so called experts on TV do not have any specific experience in the industry that they comment on. In my opinion it is not simply about a qualification, but the experience of having worked in that specific industry. For example an experience mortgage broker could have literally have advised 1000s of clients, and no exam can substitute that type of experience or insight.
2- Whole of Market does not mean Independent. A whole of market broker can choose to deal with a limited number of lenders,and still present a whole of market proposition. An Independent broker has to offer a fee only option- along side any commission option, and in my personal opinion a truly independent broker should be able to refer a client to a lender that does not pay any commission- and in that case it is justified to charge a fee. In fact there are many nsances where a fee is justified depning on the work involved- as good added value advise from an experienced broker is underestmated.
3- For example a local broker(not call centre based adviser) will have strong local property insight with contacts with many local profesionals to include surveyors and solicitors - who can be pivotal in any purchase. In relation to advise I am shocked at the amount of invidules that get dragged into focusing on the lowest rate- while in many instances if proper holistic advise is given- products such as offsets can be recommended to the right client that can result in savings of thousands of pounds.
4- Also remember your bank adviser works for that bank- while your mortgage broker should have your interest as priority as they work on your behalf.
5- Historically by using different clubs and mortgage networks brokers have also had buying power with lenders- which gave them access to some exclusive products, but also the potential depending on many factors of superior service levels. As the relationship with the banks and brokers is of a business to business natre- a good brokerage should also have instant access to industry developments,that can include securing products for cients before they get withdrawn.
6- If your application is declined by your bank you will have to start shopping around again- while a competent broker should be able to place (if placeable) your deal with a different lender in a swifter manner.

I am obviously biased as a mortgage broker, and can add much more to the above list as I strongly feel that the benefit of an experience mortgage broker is truly under estimated. To conclude I have had the pleasure in my career of working with some very experienced and competent advisers- and if you have had the pleasure of being serviced by them I promise you would agree with all my above points.

All the best - and once again Martin thank you for this website.

Tony

Chez_Guevara · 3 December 2008 at 3:06AM

Den wrote: »

I don't want to be rude, but this post again another negative point for brokers. People should read and think, this site helps. I imagine that brokers are gutted that people can share information about deals and costs of products and fees they paid, using the Internet.

That depends on what sort of broker you are - if you're stinging your clients, then yes. If you're acting as a true broker - and by that I mean someone that gets you the best rate - then no.

There's a massive difference between using a broker and going direct - when you apply direct with a lender, all employees of said lender will represent the bank. When you deal with a broker, the broker represents YOU.

I can think of countless cases with my clients where I have been able to get them mortgages with lenders that they simply wouldn't have been able to get if they'd gone direct - because I know the criteria of the lender inside out and know how to present the case.

Yes, plenty of clients could look into it and do it direct - but they come to me for about half an hour and that's pretty much all they have to do. I do the rest, right up to completion, even filling in their paperwork from the solicitors.

My regular clients only have to choose their mortgage and sign the (pre filled-in) application forms. I make it very easy for them.

So I have nothing to fear from the internet - in many ways, it only strengthens what I'm telling them, that the rate I'm offering is the best. Or I save them wasted time, effort and possibly money by telling them why the particular mortgage they've seen on the internet is not suitable for them. Why pay for a survey, if you know before you've started that a particular property will not be acceptable to the lender? Or why add more footprints on your credit file if you know the lender is going to say no?

Yes, there are bad seeds in the industry, sadly. But there are some damn good people in it too.

In life, as soon as you find a good builder, plumber, car mechanic - you hang onto that person for life, no matter what. I would add mortgage broker to that list.

thekaver · 3 December 2008 at 8:11AM

all martin seems to talk about when talking about mortgage is the intrest rates!!!!

n e borker like myself nows they is alot more to mortgages than just the rates, as they is fees, ect with variers mortgages

A broker weights these up to get the best possible saving! this means the 1 with a slightly higher intrest rate but with less fees might actually have the best savings!

HAVE YOU EVER HEARD OF MARTIN SPEAK LIKE THIS?????????

ALSO FEE FREE BROKERS? IS THEY ANY OUT THEY THESE DAYS, CAUSE I KNOW I WOULDNT WORK FOR FREE!!!!!!

thekaver · 3 December 2008 at 8:14AM

Yes A Good Point To Make Is Most Brokers Act As A Fit And Proper Person And Offer The Right Advice, As By Not Doing This We Can Be Struck Off! Therefore It Just Not Worth The Risk In My Eyes!

So I Think You Will Find 99% Of Brokers Will Be Given The Right Advice All Of The Time!

An Open Letter To Mortgage Brokers.

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