Lockhart Bruce,

Opus

There is no doubt that this changes the status quo and will have an impact on mortgage intermediaries. My own view is that the forthcoming changes will be good for the industry – and for the consumer.

On the subject of depolarisation, one only has to examine other sectors within the overall financial services industry to appreciate the scale of change that has occurred in a relatively short space of time.

Such changes have not been greeted with universal approval by the industry that is affected. But if the changes have benefited the consumer, then they have to be deemed a good thing.

The menu system advocated by the FSA also falls into this category – surely it is good for everyone involved in the overall lending process if a borrower understands every facet of the deal they are entering into?

Levels of commission have been a thorn in the side of mortgage brokers for too long. Giving the client a choice about how they remunerate their adviser is a wise move – and at long last positions mortgage advisers as a professional animal. Regardless of the pain involved in changing internal procedures, this has to be a giant step in the right direction for all of us.

Mark Mountney,

Premier Mortgage Management

The majority of mortgage brokers of a small scale are likely to be IFAs or appointed representatives at the same time: they wear two caps at the point of sale, as a mortgage broker and as a financial adviser.

In the main, financial advisers do not charge fees either for their investment advice or for their mortgage advice and rely upon the income streams of procuration fees and financial services commissions in order to remunerate themselves.

All the depolarisation and the menu system will do is to force the issue to be discussed with their clients and if they are already fee charging on the mortgage side this will further solidify the professionalism of the adviser and the industry as a whole.

Chris Cummings,

AMI

&149; take the view that the role of a good trade body is not just to keep members up to date with developments in their own back yard – but also to keep a weather eye on wider industry developments and events that could head its way.

The FSA’s publication of a consultation paper on reforming polarisation and the menu system (04/3) does not have an immediate impact on mortgage brokers – but it clearly signposts the way the industry is heading.

The menu concept was created by AIFA as an alternative to the defined payment system, which would effectively require intermediaries who wish to call themselves ‘independent’ to charge a fee. Evidence suggested that neither the consumer, nor the industry, would support such a move.

The menu is a more workable and cost effective solution and allows intermediaries to receive a procuration fee, or charge clients a fee or work with any combination if they wish. It would be useful for the industry, if those now developing their KFI systems took notice of this consultation, and included it in their planning.

Stuart Wilson,

Inter Alliance

&149; see in the latest proposals a good example of sets of rules coming together under the FSA. The current mortgage regulation proposals state that an adviser (or introducer if taking the new status) must clearly lay out how they are paid. If they wish to use the label of ‘independent’ mortgage adviser then they must offer fee charging as an alternative way of being paid.

This is an evolutionary step for brokers, as under current MCCB rules the fees they are paid are disclosed but not always in specific terms, such as when they are under £250.

For the majority of professional brokers this may actually work in their favour as clients can then see from the new proposals the services offered and the actual costs incurred, therefore giving the client a true reflection of what the broker will do for their money. Many clients may actually realise how little is sometimes earned for a lot of hard work on their behalf.

Paul Howard,

Portman Building Society

The objectives of the FSA are laudable: to give consumers a basis on which they can make choices and compare one firm with another.

However, the devil is in the detail. The truth is that even though mortgage brokers have had to declare the level of commission they receive for some time, it is meaningless information for most consumers. They have no means of evaluating if the level of commission is reasonable or not, or if it has any impact on the competitiveness of the product they are buying.

The harsh truth is that consumers want advice but do not want to pay. By and large, they are not interested in the way in which the brokers are remunerated – as long as they do not have to foot the bill.

My belief is that the vast majority of mortgage brokers will source mortgages from a panel which is representative of the whole market and will offer a fee menu option – in order to be able to describe themselves as independent. Unfortunately, I do not think borrowers will take a blind bit of notice of the fee option and will be happy for brokers to continue to receive commission from lenders.