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Lenders and product providers should not ‘dictate’ charging strategy – Star Letter 24/05/2024

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  • 24/05/2024
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Lenders and product providers should not ‘dictate’ charging strategy – Star Letter 24/05/2024
Each week, Mortgage Solutions and its sister title, Specialist Lending Solutions, pick the top comments from our readers.

This week’s first comment is in response to: The perceived value of mortgage advice is selling brokers short – JLM

Tony Silver said: “The general public need mortgage advice. I have 30 years’ experience and zero complaints. It’s up to me what fees I charge for my experience and advice. If a broker doesn’t value their advice, then how can a client? By charging a fee, I don’t have to rely on commission from selling another product to top up my income.

“I totally refute the attempts by lenders and product providers to dictate my charging strategy. As far as I’m concerned, Consumer Duty leaves this decision firmly at my door, and that’s where it should stay. I will actively avoid any third party that tries to dictate what I can and can’t […] charge for.”

Lower average case size can example lifetime mortgage broker fees

This week’s second comment is in response to: Exclusive: Two-thirds of lifetime mortgage brokers charge more than £1,000 in fees

Andy Wilson said: “We must not forget that average case sizes have generally reduced since interest rates shot up in late 2022/early 2023. There is also the best practice advice of only releasing monies that are needed immediately, leading to a wider use of drawdown plans, on which procuration fees (at a lower rate) are usually only paid when further monies are released.

“I work largely in the Midlands where small cases of £30,000-50,000 are common. As procuration fees are based on a percentage of the loan size, this impacts the total income per case, which in turn may produce a need to look again at advice fees.”

He continued: “I charge a fixed fee of £990 and have done so since I started my business in 2011. I have seen no need to increase this given that average case sizes increased throughout the first 11 years, and the percentage-based commission followed suit, but as they are now reducing, I am keeping an eye on costs, competitors, total income per case and also the FCA views on fees. My fee may need to increase.”

 

The comments here are from our readers and do not necessarily reflect the views of Mortgage Solutions or Specialist Lending Solutions.

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