Since the launch of Consumer Duty by the FCA, all firms have been required to review their fees to ensure they represent fair value for the services provided. Rather than being a ‘one-and-done’ process, this is something all firms are required to do on a regular basis.
Last year, Halifax announced that they would be setting limits on broker fees that they would allow, these limits being 1% or £1,500 (whichever was higher). While no other lender has followed their example and confirmed their limits, we are aware that many lenders have similar expectations and will certainly not be expecting to see fees above 1%. We have also been advised that some lenders such as Coventry, have set internal limits or expectations of 1% of the loan amount to a maximum of £1,250 and this will likely be the cases for other high street lenders.
Therefore, we were required to take this information from lenders into consideration when reviewing our own fees policy, to ensure that our Network Members do not fall foul of these rules and risk having cases declined due to excessive fees.
Following this review, we have made some changes that we believe are in the best interest of the customers and remain consistent with what we and our lender panel believe are fair and reasonable.
We have therefore made the decision to remove the Complex Residential option from our policy which allowed advisers to charge up to 1.5% of the loan amount. Connect will now only allow a maximum broker fee of 1% for all residential mortgages, which includes Equity Release. We have, however, increased the maximum fee amount from £2,500 to £3,000 to reflect the increasing average house price in the UK.
Connect’s fees policy has been updated and can be found in the Operations Manual in BOX HERE
This change is effective immediately and must be used in all cases going forward, however any fees already agreed will be allowed to continue so long as the terms of business have already given to the customer and can be evidenced on OMS.
If you have any questions or would like to discuss this policy further, please do not hesitate to contact the Compliance Department.
Regards
Alan Baldwin
Director of Compliance
For any questions or queries, contact the Compliance Team
Call : 01708 676110
Email : compliance@connectmortgages.co.uk