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‘Retention fees are web of sin’

Edeus managing director Alan Cleary has launched a scathing attack on retention fees, branding them a “web of sin” and insisting they contravene treating customers fairly principles.

Cleary says lenders do not have brokers’ best interests at heart and are only out to kill the remortgage market, which could mean considerably less business for brokers in future.

Alliance & Leicester head of intermediary mortgages Mehrdad Yousefi says a fairer way to remunerate brokers would be via trail commission.

Accord, BM Solutions, First Active, Halifax, and Woolwich all provide retention incen-tives while Abbey, A&L, Cheltenham & Gloucester and Nationwide are considering their retention options.

Cleary says: “Lenders are not paying retention fees to be nice to brokers. They are paying intermediaries to kill off the remortgage market and that has got nothing to do with helping brokers or treating customers fairly.

“They beckon you to enter their web of sin. The tactic they tout as a solution is to flash a bit of cash and persuade brokers to collaborate. Then the two sides collude in stopping customers from remortgaging elsewhere and protect the lenders’ huge and overpriced back books. TCF goes out the window.

“If these retention fee strategies succeed in all but killing off the remortgage market, the impact on intermediaries will be serious indeed. Fifty per cent of lending in 2006 will be remortgages – between £140bn and £160bn. Any contraction in that volume will mean curtains for many brokers.”


DWP axes web service for pensions

The Department for Work and Pensions has dropped plans for a web-based pension service for people who cannot afford advice because it admits it does not know what future pen- sion provision will look like. The Retirement Planning web service, costing the taxpayer £11m, was intended to provide advice on planning and saving for retirement […]

Fears that Nutt could be stretched by global fund

IFA reaction to Jupiter’s planned global income fund has been mixed, with some advisers voicing concerns that star manager Anthony Nutt may become overstretched. Nutt already runs £4bn in retail money split across the £3.4bn income and £600m high-income trusts. Bestinvest head of communications Justin Modray says: “My main concern would be whether they are […]

Woolwich praised as service improves

Woolwich has been hailed for dramatically improving its service to brokers after coming through a turbulent period. John Charcol senior technical director Ray Boulger said earlier this month he has noticed a major service improvement since Woolwich ditched Global Home Loans as its outsourced servicer and other brokers have added their voice to the growing […]

Paymentshield reassures intermediaries over MPPI advice

Paymentshield is warning intermediaries to apply due care with MPPI products following the latest reviews of PPI.The provider insists that the same rules must apply when dealing with mortgage-related products as do standard loan repayment insurance. The recent results of OFT and FSA investigations into PPI propose to refer the PPI market, including MPPI, to […]

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Auto-enrolment — don’t leave it too late…

With auto-enrolment (AE) well under way for the UK’s largest businesses, over the next three years an additional 800,000 smaller employers (with less than 60 employees) will start their journey to comply with the legislation. AE mandates all eligible employees and their respective employers to make regular pension contributions into a qualifying pension scheme. To learn more about the legislation read our brief Jelf AEase — simple steps to AE compliance guide.


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