A recent Court of Appeal judgement means advisers should disclose their commission to prospective borrowers to fulfil their fiduciary obligations. Whilst there is still a potential appeal hanging over the Wilson V Hurstanger case, and trade organisations have not yet given definitive advice, there is general agreement that prudent advisers should disclose loan commission, fees and associated commission to prospective borrowers, or risk having to repay such commission to the borrower.
Promise managing director Steve Walker said: “Commission disclosure is set to become an important issue and brokers using our software are well ahead of the game. Many introducers are inexperienced in the secured loan arena and they are looking to their master brokers to cover their backs. We have seen little, or no, evidence of this happening elsewhere. This is worrying as the retrospective abilities of the Financial Ombudsman Service (FOS), could mean that every brokers commission is at risk.”
Promise claimed its software wais very easy and intuitive, giving introducers the ability to look at all lender plans and see what changes need to be made to obtain a better interest rate for their client. The underwriting decision (rather than sourcing) is supported by an integrated soft credit search that fully interrogates the payment profile on the borrower’s mortgage and credit commitments. The search does not leave a footprint and the result is highly accurate.
Walker added: “This software is not a gimmick or a lead generation tool. It was developed to be used internally within our loans business and therefore has to be spot on. We have now made it available to introducing brokers to make them more effective, our process more efficient and consequently us both to be more profitable. We aim to enable the broker to properly conclude the sale and retain control throughout the process and provide the tools to demonstrate TCF and appropriate disclosure such as early settlement calculations and commissions. The fact that we also pay significantly higher commissions than most master brokers is secondary.”
