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Direct access

Dual pricing has landed borrowers not only with the research but all the administration involved in arranging their mortgage if they choose to apply for a direct deal. Brokers across the country will be asking themselves whether to offer a service to advise on and administer direct applications for an extra fee. In the current climate, it would make business sense to adapt to whatever service we can charge for and providing a choice would certainly be treating customers more fairly than we are expected to.

However, there are stumbling blocks. Most brokers do not have access to details of the products and there is no indication that we will continue to have even the information we currently do. Many sourcing systems show some direct products but it is of no benefit to lenders to furnish these database managers with their direct-only rates. After all, why enable the brokers to bypass your strategic business streamlining? The lenders are not simply trying to avoid paying a proc fee, they are actively trying to keep business down to the levels they get via their own branches, where tranches can be monitored daily.

It is for this reason that I wonder if lenders will be forced to go the next step and ban direct applications from brokers, perhaps citing that no third party will be allowed to charge a fee for advising on their mortgage range? This would be the only way to truly cut out the extraordinary amount of business that brokers create but would possibly burn the final bridge between brokers and some lenders. I am far too young to remember the mortgage rationing of the 1970s but things have been much worse than they are now and lenders have no choice but to look out for themselves.

Regulatory status is not difficult. If you are whole of market as opposed to independent, you will not be offering a fee option currently. If you wish to, you will need to advise the FSA of your switch to the independent status that allows you to charge a fee, change your initial disclosure document and marketing materials and create a fee agreement.

Going through a broker has long been accepted as the way to get advice on all possible mortgage features, not to mention the best product, and also to take all the leg-work out of the pre-completion process, yet the FSA has deemed lenders to be treating customers fairly, despite cutting the best deals out of the scope of independent advisers. Already clients have returned to us having tried in vain to tackle the application process alone, so the opportunity is there, it is simply a matter of deciding whether taking this step is the most prudent route for your own firm.

Katie Tucker is technical manager at Charcol

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