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ISCOVER
Jessica Darnbrough
Mortgage Choice’s chief executive Michael Russell has weighed into the ongoing debate surrounding fee for service.
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Given the contraction in lender commissions, Mr Russell said it is commercially inevitable the industry will need to charge a fee for advice at some future point in time.
He made it clear however, that any fee charged would be in addition to the lender commissions already received.
“Mortgage Choice agrees with the MFAA that a fee should not be charged for the work undertaken in lodging a loan application for which we are paid by the lender,” he said.
“On the other hand, the value of our advice in undertaking a prior and thorough needs analysis is easily monetised and should one day be recouped. But, that is only when there is a general understanding of this value by consumers.”
At present, Mr Russell believes there is not enough consumer awareness surrounding the value proposition of a mortgage broker to warrant a fee for advice.
Mr Russell said charging a fee prematurely would place at risk the percentage of home loans currently being written by the third party distribution channel.
“Consumers who are not sufficiently educated as to the worth of a mortgage broker's service will divert their enquiry direct to lenders,” he said.
“So should we introduce a fee for service? My belief is yes, but not yet.
“In other words, fee for advice remains in our line of sight but it is not something we are considering in the short term.”
