To charge or not to charge, that is the question

To charge or not to charge, that is the question

This week, some damning and highly detailed research was released to the mortgage industry.

In essence, and so as not to get bogged down in complex detail, someone multiplied 920,000 mortgages by £400, confidently stating that the consumer was being “ripped off” to the tune of £377 million annually.

I know. Heaven forbid the author of the research sets about tackling the thorny issue of fees in the second charge market; I fear his abacus may explode.

I am clearly (and not for the first time) exaggerating the point to make a point. People are quite rightly free to question their peers, their practices and, where appropriate, their principles. I enjoy nothing more than a healthy debate be it about:

  • Brexit
  • BTL
  • Broker fees

Intelligent people can argue their points eloquently and still shake hands at the end and agree to disagree.

The issue of whether a mortgage broker charges a fee or works solely for the procuration fee payable by the lender on completion is one that will polarise certain aspects of the market. This is exactly what we have witnessed this week.

My take is very simple

I am a professional (no, seriously).

I do not take on customers because I am not selling a product. I take on clients because I am offering a service. It is a service that is regulated, complex and time-consuming. My remit is not to sell a mortgage. I wouldn’t know how to. No, my job is to guide, counsel and help a client understand how best to buy a house, or possibly, even whether they should.

For context, I have had the same accountant for 20 years. There may be cheaper ones, there may be better ones and there are certainly ones that don’t always go on about West Ham. But, I have known him and trusted him for a long time. I am his client and I pay him a fee for doing things that I don’t understand or have no desire to understand. The value of the fee is returned to me in the form of me having peace of mind as well as more free time to do the things that I have more of an interest in.

Transparency

So I take this concept and use the same in my broking business. I tell the client there is likely to be a fee and way before they know whether I can help them or not. I point out that they will be getting an advisory approach and that they will only be charged should I have to liaise directly with a client on a mortgage application.

Before then, it is professional advice; information heavy and totally at my expense. We are happy to send clients directly to a lender, we always reveal which lender may be suitable for them and we make clear that there are brokers that charge less or nothing at all.

We don’t lose many; trust me.

So, if you:

  • Run a brokerage obsessed with winning awards
  • Call the people that use your services ‘customers’
  • Have a business model that is reliant on the whim of lender and regulator to allow it to carry on

Then good luck, I say.

However, if you don’t value what you do enough to charge someone for your valuable time and experience then it’s not the client getting ripped off, it’s you.