According to The Mortgage Alliance’s (TMA) April distribution indicator, just 35% of brokers disagreed the shift to upfront fees has become more evident.
However, when asked if they had changed from a commission-only business into a fee-charging business in the last 12 months just 26% said that they had made the transformation.
A further 9% declared that they were in the process of making the change and 65% said that they had not changed.
Of those that had not adopted a fee-charging structure only 12% said that this was a future intention; 57% said that maybe they would contemplate such a switch in the future and 31% highlighted that this wasn’t a consideration.
When asked if they thought a shift to a fee-charging basis could lose them clients, 52% of DA’s responded that they expected this to result in a loss of clients, 35% said no and 13% were unsure.
Phil Whitehouse, head of TMA, said: “The subject of fees and commission is a sensitive and emotive area and one which continues to be at the forefront of most intermediary firm’s thinking.
He said firms should not be afraid to implement a charging structure if they can break down and demonstrate exactly what service they are providing for the fee.
“This will not only provide a small income but importantly offers ample opportunity to cross sell and pick up more lucrative earnings from ancillary sales opportunities in areas such as protection and general insurance cover.”
Lee Farrington, mortgage adviser at Amber Mortgage Solutions, said the shift in the fees model has slowly started to take effect.
“Brokers are beginning to understand that because mortgages already incur fees for valuations, legals and products, borrowers are less resistant to paying an extra broker fee. As a result, more intermediaries are moving toward a fee-charging business.”
He added that regulatory pressures would force more brokers into fee-charging in the future.
“Generally, there is a month-on-month rise in the number of brokers who are fee-charging, but I imagine that the number will be far greater when the Mortgage Market Review takes effect.”“
