On the one hand, lenders claim to be reliant on intermediaries for an increasing share of their gross lending figures while many intermediaries of all colours complain bitterly about dual channel lenders offering better products through their direct or branch distrib-ution. Well, let me tell you now that this battle has only just begun.Post-regulation, we live in an open world where we can simply run a KFI on one of our competitors to determine the truth of the remuneration they overtly receive. Of course, even this is a fraud since any of the networks and clubs receive “marketing contributions” which are not disclosable and buy the lender places on their panel. A number of lenders are, how-ever, seeking to differentiate their procur-ation fees around product profitability. Simply put, the less profitable the product is to the lender, the less he will pay the intermediary for introducing it. This makes fine commercial sense from a len-der’s perspective but it places the interm-ediary in an impossible dilemma. If he recommends the best product, he gets paid less for doing so by its distributor. While this will overtly affect no-fee and low-fee brokers, ultimately, even the full-fee broker will feel the pain as the increasing customer resistance to high fees becomes evident. In a literal sense, an intermediary who treats TCF literally will be severely disadvantaged. This seems to me a nettle that the FSA should grasp and quickly if they are really going to fulfil their responsibilities to the consumer. Why am I so concerned about this issue? It is primarily because a number of the major UK brokerages and networks do not offer genuine best advice. Everybody’s model needs, as I have frequently stated before, to be driven by profitability but where super profits are generated by selecting lenders which allow you to package rather than not package and you still claim independence is a fundamental flaw which the FSA has failed to address. Remuneration is still driving the major-ity of mortgage distribution channels’ advisory process and, if lenders change their remuneration practices in the manner that they are proposing, the only loser will be the customer. And, why as intermediaries, should we worry about all this? Because, in a few years’ time, given their track record, the regulators will look back and say “Sorry, boys, we forgot to shut the stable door when it was open but, since you ran through it, we reserve the right to shut it retrospectively.” Mark Chilton is chief executive of Purely Mortgages
Prudential will not use any of its 1bn war chest to buy stakes in IFA firms but will help to finance them, says UK chief executive Mark Wood. The firm’s trading update for the half-year shows a 50 per cent rise in UK and Europe sales to 541m on an APE basis, including the Phoenix […]
UK workers will miss out on 285m of tax breaks this year by failing to take advantage of employee share schemes, according to research by IFA Promotion.The organisation says the figure represents the amount of tax which could be saved if the estimated 865,000 staff currently in a savings related share option scheme invested half […]
GMAC-RFC has entered the top 10 for gross mortgage lending after the Council of Mortgage Lenders revised its list of the biggest lenders. Last week, Money Marketing reported that GMAC was 11th but it is now placed in joint 10th place with Bradford & Bingley after the CML sent out a revised set of figures. […]
John’s Eversden scheme – resulting from a legislative anomaly exposed in CIR v Eversden (2003) – allowed a gift of the interest represented in the value of his home to be transferred to his children.
Graeme Robb, Senior Technical Manager at Prudential, explores the current state of the nation for offshore issues and highlights areas which may be particularly relevant to advisers. In the context of insurance companies, ‘offshore’ can be a relatively straightforward matter. Like their onshore equivalent, offshore bonds are ‘non-qualifying’ for tax purposes, meaning that all gains […]
- Top trends
- Top trends
- Pension tax relief in firing line as Hammond mulls ‘intergenerational fairness’ Budget
- Scottish Widows mulls Standard Life corporate pensions book takeover
- Martin Lewis wins claim against PPI chaser that used his image
- The future of Cofunds: What next for a platform titan?
- How much are advisers charging for pension transfers?
News and expert analysis straight to your inboxSign up
Latest from Money Marketing
Two company directors have been disqualified for a combined 20 years after running a fine wine investment scam that lost investors nearly £1m. An Insolvency Service investigation found that Crimson Fine Wines cold-called customers and then did not purchase or allocate wines to those who had paid for their investments. The investment scheme offered investors […]
AJ Bell has won a case against a client who wanted his platform fees for the past 14 years reduced. A client, referred to as Mr N, complained to the Pensions Ombudsman that, because he did not have enough information about what fees would be payable, he sold a property holding in his Sipp far […]