This week has been rich for top contributions.
The first one is from David Farrell for his response to the article on the Australian market: Oz latest: Could fixed rate end brokers’ commission nightmare?
Farrell said that the percentage procuration fee model is skewed to the South East where property values are much higher, there is the same amount of work involved in a £80,000 mortgage as there is an a £400,000 mortgage.
He added: “In my view lenders should stop paying a percentage model and adopt a national procuration fee per case of £1,000 or whatever their national average procuration fee has been based on all mortgage issued in last 24 months – which would be great for me in the north, all those in the south used to coining in £4,500 plus for the same amount of work, feel free to complain and explain how unjust that would be.”
Another contribution to the same article came from Dougie.
He said: “We are based in the north West but cover the whole country. House prices around us start at £60,000 to £240,000 and I average 115 mortgages/commercial/second charge loans a year and only brought in £75,000 net in the last Key Performance Indicator figures but if say I earned £500-£1,000 per case under this Australian system, I would average £86,250 working 10am-8pm Monday to Friday and 10-2pm Sat in Manchester.
“On the London mortgages which currently run to 10-12 large cases pa I could earn £8,880 per £800,000 case and currently earn £2,800 so overall I might earn well over £185,000 under a 1.1% commission scheme. Not sure who ends up paying for my wage to more than double but I would be happy.”
The last response came from London broker Arron Bardoe.
He added: “While I will not profess any experience with the Australian market, this story does seek to draw a comparison with the UK. Here, not all brokers charge fees and even those that do may waive them on subsequent remortgages, especially with greater access to rate switches.
“The main issue though has to be that many borrowers will find £500 a large sum and, if commissions were banned as well, one would have to add 0.35% to this, which is a further £525 for a mortgage of £150,000. One might hope lenders offer a fixed cashback from the saving, but, if not, I cannot see a fee-only model being successful in the UK.
“Instead, our market could revert to the pre-procuration fee world where we only dealt with adverse and problem cases or would insist on fee waiver agreements on life policies. Our market would accordingly shrink significantly albeit those borrowing larger sums might consider using a broker for a fixed fee.
“One only has to see what happened when commission was banned with investment advice to see the effects. Despite one of the core reasons for the FSMA being to promote financial awareness, the average consumer looking for a pension has now been excluded from the market as they cannot afford advice or advisers simply would offer it for such small sums.
“If there is concern of market abuse in the UK, then I agree the solution is a fixed commission from all lenders regardless of business size or whether DA or AR at say 0.35%. This would remove any risk of bias and maintain the market. Where a case is more complicated, brokers could charge appropriate fees on top, but the risk of lender bias would be removed.”
And finally, the last and definitely not least contribution came from Mr. A. Skeleton to the article: ASA has no plans to ban Habito’s TV ad despite 26 complaints.
He pointed out that the two Habito adverts serve as an insult to every honest hardworking mortgage broker within the mortgage industry and an insult to the hardworking clients who routinely and happily use non-Habito mortgage brokers.
He said: “The low point of both adverts is the implication that brokers steal from their clients. This is graphically plated out when a ‘hellish’ depiction of a mortgage broker robs the man of his cash, his wallet, a watch, a ring and even the gold tooth out of his mouth.
“I don’t think I’ve seen any company present themselves to consumers in this way in any industry in all my 45 years, let alone within our humble mortgage industry. The lack of judgement here is shocking.
“The ‘shock’ is further amplified by the response from Habito, implying the advert is not referring to other mortgage brokers, when it quite obviously does. Do you think us ‘hellish’ brokers and consumers are too stupid to realise this?
“The 11 principles of business as per the FCA guidelines say firms should act with integrity. Habito should get back in its ‘sand’ box and re-think its approach. The mortgage industry is a close knit neighbourhood. Habito, you claim to be holier than thou…..you need to learn how to love thy neighbour.”