Aldermore: Brokers shouldn’t undervalue themselves
With Haresnape on a panel was Blimey! Loans owner Alistair Ewing, who added that advisers are wary of charging higher fees in the mortgage market.
Haresnape said: “We should, as lenders, pay an appropriate fee to intermediaries for the great work that they do and the advice that they give – but there are still a lot of intermediaries who undervalue themselves to clients.
“Some are still doing it for free or very low amounts, and if you think about lawyers, accountants, and other professionals – which intermediaries undoubtedly are – they’re charging much more.
“I’m only hearing a lot about the debate around proc fees and that lenders should pay more. I’m not hearing the fuller debate about what is the appropriate fee to charge a client for the two, three hours work and advice, especially when it’s work that is fundamental.”
Industry stalwart John Malone, who was also on the panel, criticised network members being paid more than directly authorised brokers, calling it ‘immoral’ and saying it ‘must change’.
Indeed, all the panel members agreed that procuration fees as a whole ‘should be debated’, particularly with a focus towards a minimum fee after audience member John Stevenson, of JS Financial Advice Services, asked whether they should be standardised with a flat fee.
Haresnape added: “The fees that have been moved up have actually been increased from a fairly low place, which I think is right – some have been too low. One option is to increase proc fees generally across the board, but somebody has to pay for it.
“At the moment, profit margins are miniscule and we would have to pass that on somewhere; if we put proc fees up, it would generally have to go into the pricing of the product somewhere.”
“We should, as lenders, pay an appropriate fee to intermediaries for the great work that they do and the advice that they give – but there are still a lot of intermediaries who undervalue themselves to clients.”
Sinclair also clarified AMI’s position on procuration fees.
He said: “The European Mortgage Credit Directive gives home states the power to ban commission, so the directive is ambivalent on this. There has been great pressure in Ireland to ban proc fees and it’s already banned in Holland across all products – there has been a drift across Europe towards it being taken out of the equation as part of the advice sphere.
“However, from the AMI perspective, we are lobbying hard to keep procuration fees and commission as part of the market place.”