Some 58% of respondents felt that transparency around commissions is a good thing, while 27% were against it. The remaining 15% were on the fence about the merits of full disclosure moving forwards.
Brokers in favour of commission disclosure were adamant that transparency should be the cornerstone of the industry. “It’s so important that we’re transparent in our dealings; we need to shake off the baggage associated with the credit crisis,” said one. “Being upfront about ALL fees is a MUST in this industry” said another emphatically.
At the other end of the spectrum, some brokers were concerned about the possible negative impact of disclosure. Some felt that disclosing all commission could lead to a race to the bottom on broker fees. Others still felt that the importance of commission disclosure was overestimated as it shouldn’t change why or where deals get placed, given that the cost is not passed on to the client.
Karen Bennett, sales and marketing director, commercial mortgages, Shawbrook Bank, said: “The variety and strength of our intermediaries’ responses to the question of commission disclosure are really interesting. Disclosure is something we firmly believe in, but not just for the sake of getting up on a soapbox. Transparency protects everyone in the industry – not least the brokers.
“The FCA has been very vocal about commission disclosure and override schemes. To date the commercial and short term markets are outside the MMR, but brokers must be aware that they may bring further scrutiny and potential regulation on themselves if the market continues to show behaviour traits that the FCA has explicitly deemed unacceptable. Brokers should therefore be wary of working with lenders who don’t disclose commissions and should keep a keen eye on their own practices.”
Neil Pointin, founder and managing director, B&P Finance Consultants, added: “As we leave the economic climate of the last few years behind us, transparency in both lenders and brokers is more vital than ever. There’s just no place in the market for underhand deals.
“Shawbrook is among the lenders that feel as we do when it comes to being open, handling all cases responsibly, and putting the security of the client first.
“I have to say I’m not fundamentally opposed to the idea of volume override commission, for example, but I do believe that individual brokers need to show that each and every deal has gone to a particular lender for the right reason. And that reason has to be because it is the right lender for that particular client.”