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Digital mortgage firm plans network launch with adviser fee ban

  • 22/06/2017
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Digital mortgage firm plans network launch with adviser fee ban
Mortgage Gym, a digital start-up firm with advice permissions, has outlined its network, client and broker fee plans after brokers questioned the firm over ‘who owns the client’.

The company has yet to launch its service but created a stir with its plans to automate the front end of the mortgage process by asking the client to choose their own product based on questions answered in a fact find.

Once a mortgage product has been selected, the client is offered a list of brokers who have access to that mortgage product, to continue processing the application and review the product selection to give advice of whether this is the most suitable choice for the client’s circumstances.


No justification for fees

John Ingram, CEO of Mortgage Gym, explained that the technology began life as a lead generator but after realising the potential of the system, handing off the client to an intermediary to export to another system seemed “unnatural”.

Instead, Ingram has decided to develop the lead generator into a network, which he refers to as a “digital community”. However, intermediaries in Ingram’s digital community will not be allowed to charge the client a fee for their advice.

“There is no justification for brokers using Mortgage Gym to charge clients a fee,” he said.

Brokers who sign up to Mortgage Gym, to be included in its list of recommended intermediaries for the client to choose from, can choose to do so on an appointed representative (AR) or directly authorised (DA) basis.

An AR of Mortgage Gym receives the same protections it would if it belonged to any network but it would not have to pay a regular subscription fee for network services. Instead the AR pays a percentage of their proc fee to Mortgage Gym, which can vary but is typically 25%, and acquisition costs for the customer.


Challenging the way networks work

Ingram said: “We do not charge the ARs a monthly or yearly subscription fee, they only pay acquisition costs for the clients we have supplied to them. There is no commitment to us. We wanted to create a network which works for the AR in the way they want it to. We are challenging the way networks work.”

Directly authorised brokers can be part of Ingram’s digital community, but take responsibility for their own advice and compliance. A feature of Mortgage Gym’s proposition is that it completes Anti-Money Laundering and Know Your Customer checks on behalf of the broker to save them time. A DA, however, remains responsible if the checks prove insufficient in uncovering a fraudulent mortgage application.

DAs pay a regular subscription fee and percentage of their proc fee which varies depending on the plan they choose.


Who owns the client?

Mortgage Gym owns the client if they were introduced to the broker through its channel.

“Where there has been no prior customer relationship, the customer will always belong to Mortgage Gym but will be routed back to the same broker when they return,” said Ingram.

Brokers can add their own clients to the back office system called Mortgage Gym, which they will continue to own. For existing clients, Mortgage Gym charges the broker lower fees for using its services.


Professional development loan

“We want to remove any barriers from the path of an AR who wishes to join the network, so we are putting in place a professional development loan for them to use to pay acquisition costs when they are starting out,” explained Ingram.

The loan will be funded by a peer-to-peer lender which Mortgage Gym plans to announce next quarter.

The website has scheduled its launch for the summer.

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