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&#39Decent structured deals are going to waste&#39

An issue that has been on the boil since regulation was first announced is the use of the word independent. This single word has provoked more discussion than perhaps any other aspect of regulation in both the IFA and mortgage intermediary market.

If you wish to call your firm an independent mortgage intermediary in the new FSA world, here is what you must do:

•Fees. You must offer clients the option to pay a fee for your services. This means they are entitled to a rebate of any commission paid by the lender. In working out the right fee level, you should take account of the lost commission income and any administrative work you undertake in managing the rebate process.

It is my view that most people do not appreciate the time cost of advice. Most clients will look for a cheaper alternative and you are free to provide it.

•Fees and commission. A solution to the problem is a fees and commission split. The client pays a lower fee and you keep the lender&#39s commission.

•Commission only. Of course, some clients may not wish to pay a fee at all and are happy for you to work solely on a commission basis. This is their choice.

The key, as with much else in regulation, is full and accurate disclosure. Provide the client with the options and record the what and the why in a suitability letter.

The second aspect of independence is access to lenders. The FSA requires:

•Whole-of-market choice of lenders or

•A panel representative of the market.

Naturally, the panel must be properly constituted and regularly reviewed but it is an entirely feasible and welcome option for many.

Chris Cummings is a director of the Association of Intermediaries


Kreis and Cavendish hook up with VCT

Kreis Consulting intends to raise up to £30m for the Cavendish Aim VCT, a venture capital trust that may be converted to an Oeic structure within five to seven years. The VCT will aim for growth, some of which will be distributed as income, by investing in companies listed on the Alternative investment market. To […]

Nick of time to aid charity

Anna dayIt hasn&#39t been a fun week over at Mirror Money towers, recently renamed Your Money. Yes, the new name makes it difficult to distinguish from every other personal finance section, but definitely easier for dozy PRs who now have to remember one less fact. Instead of the usual Mirror – sorry, Your Money – […]


“No. I think that the idea is an absolute load of rubbish. Everyone is so careful with what they do these days.”Paul Morris. Metro Insurance & Mortgage Bureau “No. People are much more aware of what they are getting into and there is much tighter governance.”Peter Murphy,Park Lane Associates “Yes. I think equity-release products have […]

Zurich portfolio tool on net

IFAs will be able to assess clients&#39 attitude to risk and build tailored portfolios using a new internet system from Zurich. The online portfolio builder will ensure that fund selection can be fully justified and give evidence of fund recommendations. The system will initially work with the sterling bond but will be extended over the […]


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