Two brokers who spent months waiting for their commission to be paid by the same packager, were told that the hold up was caused by borrowers unable to pay initial fees.
Birmingham-based packager Central Lending Services (CLS) claims all commission paid to advisers is dependent on fees being paid by borrowers.
But according to SPML, one of the lenders involved, the procuration fee is always paid to the packager on completion and as a result they should have no difficulty paying the adviser. Late payment by the borrower should not affect the fees paid to advisers says SPML.
Ian Christlo of Mortgageline Services and Ian Fruen of Your Future Financial Planning Limited both wrote to Mortgage Solutions to ask what their rights were when claiming unpaid fees after ongoing delays from CLS.
Christlo, whose letter was printed in September’s issue of Mortgage Solutions, said he had been chasing fees from two cases placed in October 2000 and March 2001. Christlo says he was led to believe that a fee of 1% would be paid on completion.
‘CLS now informs us it has been unable to obtain its arrangement fee from the client of 2%, so cannot pay our 1%. In the other case, CLS informed us it had to take legal action to obtain it and will not clear our cheque for 1% as it wishes to deduct part of these legal costs from our money,’ he said.
Fruen experienced similar problems. ‘We were promised our 1% fee for months only to be palmed off with excuses. When we threatened to take legal action we eventually received what was owed,’ he said.
Proprietor of CLS, Terry Woolley, insisted that the deferment of payment was due, in both cases, to unpaid fees from borrowers. ‘We state clearly that all our commission is paid by clients and we cannot pay brokers until such time as we have received payment from the client. We rebate lender commissions so that we can get the best deals for customers.’
But John Prust, sales and marketing director at SPML, said: ‘All lenders pay out a procuration fee to packagers for introducing, sourcing and packaging products. Part of this fee should be passed onto the adviser for introducing the client. I would be very disappointed if we were paying this fee and it was not being passed onto the initial introducer,’ he said.
CLS’s actions were not in breach of the Mortgage Code.