With an increase in both the number of brokers working on a fee basis and the increase in proc fees provided by lenders, a broker could receive an income on each deal they process, which runs into thousands of pounds.
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However, Richard Fox, chief executive of the Society of Mortgage Professionals, believed brokers must keep an eye on the level of income they make in case the Financial Services Authority, asks them to justify the amount.
“There could be a concern that some of the fees that brokers are collecting doesn’t equate to the amount of work they are doing. Financial planners are currently asking if they are charging value for money for their services and brokers have to ask themselves the same. Is what they are being paid transparent enough to justify if they are asked to do so later on?”
Sally Laker, managing director at Mortgage Intelligence, believed fee-based charging was regionalised but the broker should be earning enough to cover the costs of operating in a regulated world.
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“Prior to regulation, brokers were just making a recommendation, but now they are working in a fully regulated environment which demands more of them and makes them more responsible for their advice. Also, the cost of operating in the market has gone up considerably with compliance and the costs of working in a regulated industry.”
Rob Griffiths, associate director at the Association of Mortgage Intermediaries, believed brokers were well within their right to charge fees as well as taking a lender proc fee but insisted all costs had to be transparent.
“We have nothing against mortgage intermediaries working on a fee basis and we need to get away from the misapprehension that advice should be free at the point of source. A broker will often put in a lot of time and effort into a case that won’t complete. Regardless of how fees are charged, they must be transparent and the client must be happy that they are getting value for money.”
