www.mortgagestrategy.co.uk
June 29, 2009
Fee or free, it’s clients’ choice
Mortgage Strategy’s straw poll this week is a clear sign of how
the credit crunch has shifted opinion on the subject of fees. With
more than 1,600 brokers voting, 53% say they now charge fees
for advice – a radical change from the days when most were
remunerated by proc fees.
But with lenders cutting proc fees and the housing market in a
slump you don’t have to be Einstein to figure out that relying on
proc fees is going to be tough. Brokers have been diversifying into
protection, general insurance and even utilities. But those who
have adopted a fee payment structure for the advice they provide
have also been able to branch out into that great intermediary
unknown – direct-only products.
Those in favour of charging fees say it gives them the freedom
to provide truly whole-of-market advice by allowing them to steer
clients to the likes of, say, HSBC – which doesn’t pay proc fees – if
it has the best product for their needs.
Some brokers have questioned how this sits with the Financial
Services Authority’s Treating Customers Fairly initiative and
whether the result could be an increase in the cost of advice for
consumers. There are also issues over what constitutes a
reasonable fee for advice.
These are good questions, and with the publication of the
Retail Distribution Review – although it doesn’t apply to
mortgage brokers – this could be a good time to discuss them.
But with the broker market split pretty much 50/50 in terms of
offering free or fee advice, the clear winners are consumers. They
can choose the type of advice that suits their budgets and this
should be taken into consideration by the FSA if it decides to
expand the remit of the RDR.
✱
INSIDE >
NEWS
● Abbey says service will improve 4
● House prices static in June 6
● Lenders warned on buy-to-let loans 8
ANALYSIS 12
Jonathan Cornell’s Marketwatch, Nigel Stockton on dual
pricing, Peter Mounty on the collegiate approach, James
Sherwood-Rodgers on fraud, Roger Edwards on downturn
treats, Alan Cleary on arrears, John Murray on the State,
Mark Jones on personal protection, Jon King on long-term
partnerships, Bob Young on the FSA’s lender probe, Robert
Winfield on direct deals, Dean Murphy on branching out
and Eddie Goldsmith on rent-back changes
LETTERS 16
COVER STORY 18
● CHRISTINE TONER
Connecting the links in the property chain can lead to
increased efficiency for brokers and lenders alike,
according to Richard Hurst and Paul Duckworth,
directors at The Charlbury Group
COMMENT 22
Sue Read on a nation divided, Simon White on building
blocks, Rajiv Agarwal on EU rules, Gerry O’Brien on
relationships, Robyn Hall on getting it right and Kevin
Paterson on tenant safeguards
JOBS 28
DIARY/SPOTLIGHT 30
● Mortgage Mole and 60 Seconds with Ashraf Piranie
COVER IMAGE BY TERI/UNP
CONTENTS
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MORTGAGE STRATEGY June 29, 2009 3
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