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Ex-broker MP calls for more transparency on bank advice costs


Liberal Democrat MP for Eastleigh Mike Thornton is calling for banks to disclose to customers how they charge for mortgage advice services in order to level the playing field with brokers.

Thornton, who is a former broker and was elected at a by-election in March, says intermediaries have to disclose more information about charges than banks, which can falsely lead borrowers to believe they are being “ripped off” by brokers.

Brokers must disclose their advice fee as well as the amount they are being paid through the lender procuration fee. For bank advisers, staff are usually paid either a salary or bonuses for each sale as part of a firm incentive structure and Thornton says the cost of the advice service is often factored into the product. 

From next April, all mortgage sales must be conducted on an advised basis under MMR rules. Thornton says the new rules make it more important customers realise they are paying for bank mortgage advice too.

Thornton says: “The trouble is most people think mortgage advisers are trying to stiff them or get extra money so it has to be absolutely clear.

“If someone goes into a bank branch for advice it is important they realise they are paying for advice as well.

“The trouble is that mortgage brokers have to declare their earnings whereas when borrowers go into a branch their advisers don’t have to declare anything so it looks like it is better value to go into a branch.”

Association of Mortgage Intermediaries chief executive Robert Sinclair says: “I agree it is not fair on brokers and banks should have to disclose full and fair costs.”


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There are 4 comments at the moment, we would love to hear your opinion too.

  1. If a Bank adviser is being paid a salary, ergo, has no vested interest in whether a sale proceeds or not, why should he have to disclose anything to the customer? If a broker however, has to sell that mortgage to earn a living, ergo, has a vested interest in the sale proceeding, then it’s quite right that a customer should know to what extent he is being influenced by that incentive to progress that sale.

  2. Re 8.50am. Sam. You have obviously never worked in a bank. It is called targets, miss them and you will be seeking alternative career opportunities very quickly. A bank employee has a very real incentive for ‘making the sale’. It is not about bonuses, or that new Jag/BMW it is juts keeping their job and thus a roof over their head and food for their family. The bank industry advises in a climate of fear.

    Both banks and brokers should be operating on a level playing field to ensure free competition and customer choice. That was the whole point of the RDR nonsense. Banks should separate out their advice charges in an itemised document just as brokers do. Anything else is just fudging the figures.

  3. Anonymous | 28 Jun 2013 9:26 am

    Spot on!!

  4. Sam, We’re not talking about a sale here, we’re talking about mortgage advice. If I went into a bank looking for a mortgage to buy my new home, or a remortgage to fix my rate or reduce my payments and the “teller” had no vested interest in whether they got me a mortgage or not, I would furious. This just proves that bank customers are just numbers, not clients.

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