I was under the impression that the role of a broker is to research and provide a solution to a client’s particular set of circumstances.
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The first charge in a large percentage of cases will, I’m sure, be the best advice for a client but the broker who ignores the blossoming second charge sector does so at his peril. Consider the situation where a client is tied in with his current lender for another 12 months and has been refused a further advance to finance some home improvements.
Do you remortgage him, incurring an early redemption charge (ERC) together with the arrangement and valuation fees on the new mortgage? Or in the interests of best advice and ‘Treating Customers Fairly’ do you arrange a secured loan with no upfront costs? In 12 months’ time the loan can be repaid as part of a standard remortgage and if it is under £25,000 will only carry an ERC of one month’s interest.
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Brokers have to ensure they are able offer a full range of solutions and to suggest that arranging a secured loan is beyond ‘their limits’ is a little patronising. There are numerous master brokers who are able to provide a fully researched decision-in-principle and even complete all the admin by dealing directly with the client. I’m sure I don’t need to highlight the time-saving benefit of this.
In many cases the loan can be argued to be best advice and the example above also has the advantage of providing the introducer with a ‘double hit’. Best advice does not typically equate with increased broker earnings but in the case of the secured loan sector it certainly can do.
Richard King
Business development manager, North West
Direct FS Ltd
