Brokers Must Show All Commission Deals Not Just Preferred Plan

Brokers Must Show All Commission Deals Not Just Preferred Plan.

The European Mortgage Credit Directive will force all mortgage brokers to disclose the potential commissions payable to them from all lenders in addition to the mortgage product that they recommend to you.

They will only be required to do this if you ask them to tell you.

Mortgage brokers are up in arms as this will force their hand when arranging mortgages for their clients.

At Roberts Clark (the owners of financialadvice.net), we charge set fees for all mortgage advice. Our fee is broken down into two distinct segments. The first being the research, search and placement for a decision in principle and the second part of our fee may or may not be payable if we recommend either a mortgage deal that we can make the full application for you or a mortgage application where you must apply direct.

Many people will not be aware that there are essentially two mortgage lending markets for you as a borrower the first is mortgage lenders that only deal with brokers and the second is direct to consumer mortgage companies. This means that if you approach a broker they may not in fact consider mortgage deals that pay no commission (known as a proclamation fee) i.e. direct deals but only consider deals that pay commission despite the fact that a direct deal may have been better for you.

Under the new European mortgage credit directive, if you ask them to, they will be required to disclose potential commissions ranging from clearly the highest commission paying mortgage deal right down to the mortgage deal but pays no commission whatsoever if it were available to you. Sadly, there may be mortgage brokers out there but only consider commission pain deals and this will put you in a position of strength to challenge your mortgage broker if there is a better deal available to you but may have not been recommended because no commission was payable.

Comment

We think this is fantastic news as we already research the whole of the mortgage market including both direct only and broker only deals for our clients, meaning that our mortgage clients always get the most suitable mortgage for their needs and indeed may only be required to pay part of our fee rather than a full fee if we recommend a direct deal meaning that you have to make the final application yourself.

The mortgage broker will even be required to have a disclosure document signed by you confirming whether you want to see all potential commission deals or not.

Whilst it may not be professional of us to comment in this way, you can guess why certain mortgage brokers are 'up in arms' about this European Directive. Ha ha! They have been found out.