Adrian Kidd, an IFA for Mint Financial Services, believed many brokers are tarnishing the image of the industry by charging excessive fees to clients, even though they are getting a large commission fee from the lender.
Kidd said: “It’s all about transparency in the process and doing what is best for the client. But how can you look them in the eyes if you charge them 2 per cent when you are already getting 2 per cent from the lender? I wouldn’t charge that much on pension transfer business, for example, even though it is much more work and more risk to me.”
Fees in general have come in for heavy scrutiny in recent months, with the continuous implementation of the Financial Services Authority’s (FSA) ‘Treating Customers Fairly’ (TCF) ideology also receiving plenty of attention.
Jon Burridge, managing director of Quantum Mortgage Brokers, believed ‘justification’ was the key word.
“Every business has got a different model and if you can show you are taking a fair price for the work you do, then that should be okay. It’s all about justification. We charge a £350 standard fee that covers all our admin costs so we would support the argument against those who are caught up in the practice of charging unjustifiable fees.”
Rob Griffiths, associate director of the Association of Mortgage Intermediaries, said: “The Initial Disclosure Document (IDD) an intermediary firm has to provide at the start of the advice process details fees for the customer, so they are aware of what the fee covers. The FSA rules say the process should be transparent so it’s then up to the customer to decide if the money is justified. As long as the broker is fulfilling his duty in terms of the IDD, the customer can compare fees from different brokers and use who they want.”
