"Brokers, clubs and packagers have no control over what a lender charges, arrangement fees, valuation fees, but now we're being told what we can and can't charge. So I think we'll see more of that, unfortunately."
- Michael Craig, Brilliant Solutions
More lenders may dictate the fees that brokers can charge under Consumer Duty rules, according to a panel of lenders at Mortgage Adviser Event London earlier this month.
Speaking in the Financial Reporter Futures Theatre, the panel - featuring Cameron Parsons from Uinsure, Rachel Geddes from Mortgage Advice Bureau, and Michael Craig from Brilliant Solutions - discussed providing well-rounded advice on everything from protection to later life.
Responding to a question about Consumer Duty, Michael Craig said: "It's never straightforward with the FCA when they bring in anything, because it's always very much open to interpretation. I think my slight concern that I've seen recently is that some lenders are now starting to dictate what brokers can or can't charge. I've had conversations with lenders to get rationale. And the rationale was always Consumer Duty. Brokers, clubs and packagers have no control over what a lender charges, arrangement fees, valuation fees, but now we're being told what we can and can't charge. So I think we'll see more of that, unfortunately."
Last month, Halifax became the first lender to announce a cap on mortgage broker fees. A cap of 1% or £1,500, whichever is higher, was brought in from the 1st of June.
On the same topic, Rachel Geddes said: "It's so important that brokers, businesses, lenders, businesses talk continuously. We need to learn if we don't keep doing that, then we're just going to get dictated to. All of a sudden, we are getting squeezed in more and more places. Actually, we all want to do the right thing by the consumer, but we all still need to run a business. We're all here to actually make money as well. But we have to keep on vocalising, we have to keep pushing back."
Consumer Duty has positively impacted GI sales
A more positive aspect of Consumer Duty has been an increase in general insurance sales, the panel agreed.
Cameron Parsons said: "For us in the GI business, it's really opened the door. A lot of advisers have been ignoring GI for a long time, so it's sort of forced us to take a hard look in the mirror as to whether we're offering the right tools to advisers to make it as easy to sell GI as possible, which has led to a revamp of our whole proposition. Gone are the days of just being able to ignore it and move on until customers sort it out themselves."
Rachel Geddes added: "People want to have that conversation about protection. They are more aware of it. They know they need insurance, and they want you to lead the direction. I do think there's going to be so much more focus on protection and GI any business who's not doing it and hasn't got a partner to refer out to needs to be looked at. It's not the right thing by the client, and the FCA is going to get hotter and hotter.
"It could become a point where it's dictated that if you aren't doing it yourself, do you need to have a referral partner? And that's where the FCA could be pushing to go in the next two, three years - what documentation are we providing the client to make them aware of their risks, their shortfalls and what they should be doing? But it is also an opportunity from a business point of view. We're getting squeezed left, right and centre on proc fees on everything else we're doing."
What is holding some brokers back from engaging in protection?
When asked what is holding some brokers back from fully engaging in the protection and GI process, Rachel Geddes said: "I think comes down to two things, time and confidence. I'm 20 years in, and I still have not figured out how there is only 24 hours in a day. But it's introducing it early, it's not an add-on. It's not an after sale, it's part of the service. And it's changing that mindset, but also if you're a broker, and you're not feeling confident, speak out, speak up to your managers, or speak out on platforms. There's so many social media platforms now to speak out and ask for help to get more confident and more experience and knowledge in this department."
Cameron Parsons said Uinsure has also found two key drivers for why this is happening, stating: "The first one is that advisers don't have time to be selling GI. The second one is the products have become quite commoditized, so customers are happy to buy it themselves. So what we did is we integrate it into a bunch of CRM systems, and we can actually track a mortgage in real time. So what that means is key milestones like offer, exchange, and completion, we will engage those customers directly, enabling them to buy a policy themselves online. What that's meant is advisers don't have to think about it at all, we send a text and email to every single customer. And we've been enjoying a 45% conversion on purchases. So it's been really revolutionary for advisers who aren't interested in selling GI, but what you can do is offer a really consistent approach to your customers, meet them where they're buying GI today online, and enable yourself to take back market share from aggregators."
You can watch the full panel session from Mortgage Adviser Event London in the video at the top of this article.
