Lenders and brokers must work together

Open Letter to Michael Coogan, director general of the CML

Mr Coogan,

As yet another representative of lenders makes spurious and ill-conceived comments about the broker community, the time has come to redress the balance, and to help you to remove the blinkers that you and some of your members seem to be wearing.

For years, the broker market has suffered from the poor administration that most lenders seem to offer. For years, we have had to put up with client information being lost or 'not received', the non-returning of phone calls, outdated or deeply flawed technology, processing delays, onerous charges and a refusal to discuss mortgages that we arranged.

Now lenders refuse to accept the clients' right to appoint agents, as well as increasing cross-selling in many forms. As members of the intermediary community are probably the only people with whom the client has regular contact, we really do not understand this attitude.

When you consider the broker's role in the mortgage application and advice process, it is not difficult to establish that we take on a far greater proportion of the initial administration (and regulatory risk) than happens at branch level. This is clearly demonstrated when a lender has a particularly competitive interest rate and cannot cope with the applications. So why are you hell-bent on destroying this relationship?

We know that the current trend of trying to get clients to apply direct just does not work. Every week, we get frustrated calls from clients who have problems in dealing with your members directly. The problems are much the same as listed above, but this time it is the client that is getting frustrated and we are continually asked if we can help.

We are convinced that your members' staff do not have the skills, interest or enthusiasm to deal with clients' day-to-day problems when buying or remortgaging a house. Do they speak to the solicitor when the client is concerned about something? Of course not. Do they sit down and go through the survey and explain what it means? No. Do they keep the estate agent and other parties up to date as the mortgage progresses? No.

There is more to it that just filling in the mortgage application and getting a mortgage offer: it is more about client care, holding their hands right through the process until they get the keys and walk through the door.

Do your members do this? We are sure that a few do, but it is not generally done, as the client rarely speaks to the same person more than once.

You mention the need to 'improve advice'. Why is it that most of your members do not offer an 'advised service' and those that do cannot do so in a timely manner?

You mention the need to 'review' the form of remuneration, and yet your members variously charge administration fees; account fees; fees for reading surveys; uplifted valuation fees; large 'arrangement' fees, (sometimes higher than when a broker does the arranging); and redemption fees, which often do not reduce in line with time served.

All of these are designed to increase lenders' profitability and yet you feel that procuration fees are not fair and that brokers represent a cost, rather than a service to you that saves you money.

The time has come for you to wake up, so we challenge you to visit some brokers' offices and to sit down and see how they operate in the real world.

Your members are not perfect, and they are as much a part of the problem as everyone else. They provided the products and paid their business development managers to promote their introduced mortgage sales through whatever means.

In fact, recent statistics from the Financial Ombudsman Service show that out of the 127,471 complaints they received, the banks accounted for 59% of them, mortgage intermediaries only 4%. The majority (59%) of the complaints were lodged against your members. That is not an enviable record, whichever way you look at it.

The time has come for all parties to put the past to rest, sit down and work together towards an improved future. We know that this is largely about your members increasing their profitability, but brokers are an integral part of generating new business and providing client care. We also play a huge part in ensuring affordability, which is essential for the quality of your mortgage books and the future financial health of the nation's economy.

We seek clients; you seek customers: you need to understand the difference.

Should you wish to destroy this channel, through whatever means, we think that you are in for a surprise. The public, on the whole, wants to deal with real people who care about them and care about their future.

We are clearly those people.

The Cherry Forum