Alastair McKee is managing director of One 77 Mortgages
Charging twice for the same thing has never sat comfortably with me. You’re getting a proc fee from a lender so how can you justify charging the borrower, too — whether that’s a flat or percentage fee?
It happens, of course. In fact, it happens most of the time in our industry. And the justification you generally hear is that it’s really not dissimilar to a solicitor charging for professional advice. Never mind that solicitors do not get paid proc fees.
So what’s driving brokers to double up on fees? The most common reason I’ve come across is high overheads, usually in the form of a central London office with all the punitive rent or lease payments that this entails.
But should that cost really be passed onto the customer? Why should they have to pay for a business model, usually structured around face-to- face advice, that a broker has chosen? And, hand on heart, is face-to- face advice really that relevant these days?
Phones and email do exactly the same job and are arguably more appropriate given how time-pressed people are today.
Another justification for charging fees is the fact that certain loan types – buy-to- let or sub-prime, for example – involve more donkeywork.
No broker will deny that but equally you can get a lot of straightforward resi over the line with very little fuss with the wind behind you. These things even out over time.
Anyway, if you do charge fees as part of your proposition, that’s entirely your right and good luck to you. But the thing is, and this is where things get a little more questionable for me, not all brokers who charge fees charge them consistently.
They often only charge them when they think they will get away with it. So while the idea of fees certainly won't be broached with a savvy London trader, who’ll know very well you’re getting a proc fee, with a less experienced borrower — a first time buyer, for example — the line could be that a fee of £295 or £500 is very much the norm and everyone else charges it.
Truth is, of course, they don’t.
Ultimately, if you charge a fee consistently to everyone, and make it very clear right at the beginning, that’s at least transparent and customers can make a decision accordingly. But, for me at least, charging some a fee and others not is a long way from TCF.