The broker, who wished to remain anonymous, said two firms in South Wales in particular were taking advantage of clients with adverse credit or those looking for debt consolidation through a remortgage. He said the fees would often be placed on top of the mortgage, forcing the client to pay extra interest and leaving them worse off in the long-run.
The broker said: “My concern is that they are giving advice to people who lack financial savvy and who are often vulnerable clients, usually desperate and turning to the broker for advice. They are fleecing them and getting away with it. The information should be on the Key Facts Illustration but people who don’t understand will either not read it or gloss over it.”
MI was also told the accused brokers are scheduling these clients in for financial reviews further down the line which they are charging another fee for and then beginning the process again.
“Sometimes they include an agreement in the deal which will see serial consolidation so after charging a massive fee originally, they will see the client two years later, for around £150, and get them onto a new agreement and charge more fees for arranging that. I’ve got nothing against brokers being rewarded for their work but the industry needs to drive these people out as they are damaging our reputations,” he added.
Daniel Clayden, director of Clayden Associates, argued that while brokers should dictate their own fees, they need to be responsible. He said: “Brokers need to be realistic in terms of the percentage they charge. A £1,000 arrangement fee on a £500,000 mortgage is pretty good but £1,000 on a £50,000 mortgage isn’t.”
