News & Views

Three brokers banned

The Financial Services Authority has banned three mortgage brokers based in the South-East. Joseph Chinedu Nwosu, the founder of Gemini Mortgages - an East London brokerage - was banned from the industry and fined £200,000 for misconduct and mortgage fraud.

Jageet Kaur, a Gemini adviser was also banned while Alaba Adewale Adebajo, director of Croydon-based Whitehouse estate agents and financial services received a ban and a £150,000 fine.

Rents rise in London and South-East

Renters in London and South-East saw a 1.7% increase in March, further demonstrating that that buy-to-let sector is making a resurgence. After a tough few years for the industry the return of some major lenders along with the creation of new brands has seen the sector witness something of a rebirth.

According to LSL Property Services latest buy-to-let index, rents increased for the second consecutive month in March. The average rent rose by 0.4% to £687 per month.

The average rent in March 2011 was 4.2% higher than in March 2010. This meant the figure was the highest since November 2010.

The broker fee debate

Interview with Matthew Anderson
Fincorp's view: The broker fees debate

The debate surrounding how brokers should be remunerated rages on and the industry is split. While the need for advice has become more apparent since the credit crunch hit and the markets tightened, how that advice is paid for is still undecided. Should brokers charge fees up front to a consumer? Or should the costs lie with the lender? Matthew Anderson, director at Fincorp gives his opinion.

Where do you stand on the broker fees debate?

I think people loathe having to pay brokers. But most people don't have the time or knowledge of where to go to find the best product. Consumers may begrudge paying brokers but it's money well spent. In terms of the argument for and against paying fees direct, most brokers are paid on success. Some people pay an awful lot of money up front without getting any guarantee of success. We're strongly against this. Most of the brokers we work with are happy to be paid on success. Most of us in the bridging world pay the introducer.

Why do Fincorp choose to pay commission out of their own pockets?

Our message is 'clear and simple', that means no fees. A lot of people in bridging muddy the waters by charging certain fees. We think it's simpler to offer one flat rate and make it uncomplicated. If we pay broker commission out of our own resources then that's our own choice, there's no burden on the consumer.

Do you think consumers are more willing to pay fees following the credit crunch?

I think with products like mortgages, fees are becoming more and more commonplace. People can be perturbed when the fee is added to the loan. Consumers don't like not knowing what they are paying.

How difficult is it for brokers at the moment?

Brokers operate in a difficult market. A lot of mortgage companies go direct to consumers and the days of being a mortgage broker and making a nice, comfortable living are gone. What we're finding in the bridging environment is that brokers who might normally have referred a bridging enquiry to someone else because they didn't know too much about the sector, are now interested in taking them on themselves.

We're getting a lot of calls asking how bridging finance works. Brokers will also want to know what's in it for them. Just like mortgage lenders would pay brokers for passing on clients we'll pay them for their business and hopefully they'll continue coming back to Fincorp.