Lenders’ combined fees excuse exposed

On the KFIs many lenders show broker and packager fees as one combined fee, which many believe is causing a massive disadvantage for intermediaries and packagers as consumers think the fee details what both parties will receive each, rather than it being split between them. However, in the case of unregulated packagers their fees are not being shown, which has instigated the argument that they are receiving an unfair advantage over regulated packagers.

Until now, lenders have hidden behind the excuse that these fees are shown as one due to compliance rules. But Mortgage Introducer – News has been informed that one lender has finally confessed the fees are combined simply because lenders’ systems cannot deal with detailing the fees separately on the KFIs.

John Mawdsley, director of The Mortgage Partnership, said: “I have been told by one lender that it was showing a combined fee on the KFI purely because of commercial reasons. And this goes across the board with every lender. It was explained to me that lenders basically made a commercial decision not to show separate fees because their systems wouldn’t be able to deal with this. It has nothing to do with rules on compliance.”

Mawdsley refused to name the lender who had made the confession.

Guy Garrard, director of business development at em-financial, commented: “If lenders aren’t splitting the fees, it’s because they don’t want to, rather than them not being able to.”

But Bill Dudgeon, managing director of The Mortgage Business (TMB), denied lenders showed a combined fee for commercial reasons. “We have the combined fee purely to go along with the spirit of MCOB. We name all the parties involved in the process and then have the total, combined fee,” he explained.

However, when asked why TMB did not show the separate fees that all the parties receive, Dudgeon admitted this was because it made processing harder.