Ashley Clark, director of Need An Adviser.com, said lenders should allow brokers the choice of foregoing commission and then improve the deal or charge nothing for a survey. He stated that while this option was available on pensions or Independent Savings Accounts, mortgage lenders offered no such facilities on online applications.
Clark added that the Financial Services Authority required brokers to give a fee option in order to be called an independent adviser and he believed the market was gradually moving towards being fees-based. “While I accept mortgage systems are still in development, there are certain areas of the industry that want to work on a clear fee. Lenders have to be aware it’s an evolving market.”
He stated there were also ‘Treating Customers Fairly’ implications, as paying the commission back to the client would be taxable as an income from the client’s point of view.
Jeff Knight, director of marketing for GMAC-RFC, said: “It’s a very interesting concept, but mortgages are very different to pensions, in the way they are designed, so it would present difficult challenges. The pricing is also very complex with mortgages.”
However, Colin Snowdon, chief executive of Freedom Lending, said most brokers expected to be paid for the work they did. “It would be incredibly complicated to do something like this and there is nothing to stop a broker giving the client the procuration fee they receive.”
