We want to bring to your attention the ongoing scrutiny by lenders regarding what they determine to be fair and reasonable levels for broker fees. Initially, this focus was placed on residential mortgages, which led to a reduction in our network’s fee tolerance for residential transactions. However, lenders are now extending their review to include fees charged on Buy-to-Let (BTL) mortgages, including non-regulated loans.
Currently, we are actively engaging with our panel of lenders to understand their expectations regarding acceptable broker fees. One notable example is Coventry Building Society, including its subsidiary Godiva, which has implemented a broker fee cap of 1% of the loan amount or £1,250—whichever is lower—across all their products. However, other lenders have the same fee tolerances which is why we are currently in discussions with them.
Be Mindful of These Developments
It is crucial for all our ARs to be mindful of these developments to avoid any potential issues with lenders. In extreme cases, failure to comply with lender expectations could result in case cancellations or even removal from lender panels.
We want to emphasise that brokers should always select lenders based on what is best for their clients and not make decisions based on fee restrictions. Understanding market expectations and setting broker fees accordingly will help ensure smooth transactions and continued positive relationships with lenders.
Current Status
At present, Connect has not revised its allowable broker fee structure. However, we are actively reviewing this matter, and should any changes be implemented, we will communicate them in advance.
Please ensure that you remain aware of these market expectations and adjust your practices where necessary. If you have any questions or concerns, do not hesitate to reach out to the Compliance Team.
Regards
Alan Baldwin
Director of Compliance & Operations
For any questions or queries, contact the Compliance Team
Call : 01708 676110