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Part-time brokers should not pay extra network fees say brokers

  • 25/06/2015
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Brokers who work part-time or carry out a lower than average amount of business should not be subject to higher network fees, according to a broker majority.

A Mortgage Solutions poll with 109 respondents revealed that two thirds of brokers think that such a move is unnecessary, compared to 39% who were in favour of such action.

Pink Home Loans made the move to increase fees for less active brokers last week, in order to ensure all advisers were contributing “their fair share”.

Julian Harris Mortgage Network CEO Julian Harris said the issue is one that the network had grappled with for a number of years.

“We have to cover our flat training and competence supervising costs in respect of a low producing adviser, but do not wish to alienate them by having an accumulative monthly fee, which can wipe out most of their income. We have found that the most palatable solution that usually covers our costs is to have a higher network percentage retention for the very low producers,” he said.

“For advisers that produce less than £2,250 of total commission and procuration fees in a quarter, we charge 30% in the following quarter, rather than our standard 15%. This is a very low threshold and as mentioned, needed to cover our flat training costs. We do not take anything from their broker fees,” Harris explained.

In 2013, Personal Touch Financial Services stated it was ‘weeding out the mortgage dabblers’ by adopting a deliberate strategy to downsize the network and restructure its fee model. The network’s five-year plan is to create a smaller, higher quality advice network, with a focus on consumer outcomes and professional standards.

David Carrington, sales and marketing director at Personal Touch, said there was a strong case for dabblers to be subject to extra fees.

“Our experience is that, in general terms, this type of adviser presents greater risk to a network and there is a greater chance of poor customer outcomes. If you need a doctor to perform a heart bypass would you rather choose a surgeon who conducts the operation every day or a part time GP who dabbles once a month?

“We addressed the issue of dabblers three years ago as part of the restructuring of our network and it is encouraging to see others follow our lead, albeit a long time afterwards.”

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