Independent financial adviser Hargreaves Lansdown’s mortgage arm is to offer customers cash if they submit mortgage applications on an execution-only basis.
Ian Jordan, head of mortgages for Hargreaves Lansdown, said clients were well informed and often plumped for a mortgage they had sourced themselves, despite having had an advisory session and recommendation.
Some had even contacted the adviser independently asking if they could receive a cut of the procuration fee if they submitted their chosen mortgage through the company.
Jordan commented: ‘I have had clients ring me who have not asked for mortgage advice, but if they could share our commission if they submit their application through us, so there is definitely a demand.’
Due to differing procuration fees from lenders, Hargreaves Lansdown will not pay a percentage of fees, but give cash according to loan value (see table).
Jordan added: ‘We have been giving clients full advice in the past and we will continue to do that.’
Although the service is in its infancy, Jordan said: ‘The internet is the next phase. We are looking to develop a facility so everyone can apply through us online. It is not a long way off although we have yet to set a timescale.’
Siobhan Hotten, head of public relations for Bradford & Bingley, said: ‘I think on the face of it, it is a novel concept.’
However, she felt as the mortgage market developed there was an increasing demand for full advice and questioned how big the market for execution-only services was.
If borrowers move to such a style of mortgage application, Hotten questioned whether they would bother to go through an intermediary and instead simply go to the lender direct.