In any potentially negative situation, self help is always more effective than an appeal for “mercy” to the people who are making things tough.
There is no doubt that dual pricing has persisted for many months and is set to continue for as long as liquidity in the mortgage market remains limited, and lenders are rationing mortgages rather than trying to increase sales via the intermediary distribution channel. Of course lenders will weight their products in favour of direct business, because it cuts out the need to pay a proc fee to brokers. Anyone in their position would do the same. We don’t all belong to a cosy mutual-help society – we are trading in a fiercely competitive marketplace that is suffering the worst trading conditions in memory. I fear that “naming and shaming” lenders who are not broker-friendly will fall on deaf ears in the current trading climate. In addition, the FSA has already ruled that dual pricing is not a violation of TCF – so there’s no point trying to recruit TCF to support any arguments against the practice.
The answer is really for mortgage brokers to stop regarding themselves as merely a distribution outlet for lenders, being paid a fee for every sale they introduce. Instead, brokers must raise their game and recognise the value of the professional experience and expertise that they are, in effect, “selling” to the mortgage customer, by charging a fee for their services.
In general, consumers value what they pay for and don’t value what they can get for nothing. In our experience, most brokers that take an intelligent approach to charging a professional fee find customer highly receptive to the idea – so long as they can demonstrate the high level of savings they can achieve for the customer by using sophisticated sourcing tools that include and compare products across the whole market - including both intermediary and direct products.
We have been developing broker solutions to beat the dual-pricing problem ever since it first emerged in April. Since then we have developed a complete solution for brokers, from the initial production of a KFI for direct products, to include a whole of market sourcing system, a fee justification tool to demonstrate to the customer the benefit to them of paying them, an effective sales process, getting a fee agreement in place with the customer, and collection of the fee by a debit or credit card payment. There is now nothing to stop mortgage brokers from offering the customer the choice of paying a fee to have the cheapest direct product or possibly not paying a fee to have the cheapest Intermediary product.
