GUIDE TO BRIDGING FINANCE
fees to the mix and trying to help customers understand why is a tall order for even the most experienced broker. Many consumers see things in black
and white. They are aware there may be a fee involved with a financial product but they expect it to be fair and to be explained to them by the broker. Often, this is not the case. Indeed, even the vocabulary used
makes for easy misunderstanding. Ask the man on the street for a definition of an exit fee or early redemption fee and he will most likely look at you blankly. But on many occasions product fees and things like exit charges are hidden so deep in the small print consumers are completely unaware of them. They don’t just misunderstand the fees listed, they don’t see them in the first place. Sue Anderson, spokeswoman for the Council of Mortgage Lenders, says trans parency is important so consumers can make an informed choice and under- stand the deal they are choosing. “Transparency sits at the heart of the
regulatory system to ensure consumers have full information about the loan they are choosing, including the fees,” she says.
But Anderson adds that transparency is not the same as uniformity and it is appropriate for lenders to be free to offer products with different fees, or fees cal- culated in different ways, so that con- sumers and brokers can have choice and the ability to pick products that are a good fit for individual circumstances.
Making brokers’ lives easier Trying to explain lender fees to con- sumers can be a difficult task, especially if a customer is blinded by the headline rate and is reluctant to see the negative side to the product. “What is coming across from my inter- action with brokers is the lack of trans- parency in bridging,” says Barry Scott, business development manager at Fin- corp. “There may be a good headline rate but when you read the small print there
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are charges everywhere. We don't have small print. “Brokers can sit with clients and go
through a product, knowing that we won't come back with, ‘okay but there's an additional fee’. It’s clear and simple.” This is something Paul Barber, direc-
tor of Enfield-based Discount Mort- gages, knows all too well.
Barber had an initial experience using bridging loans but with a lender that had somewhat covert fees. This led to a client of Barber's ending up in high arrears on redemption and with a con- siderable increase in rates. “As a broker explaining a product to
the client it is important to understand all the fees,” he says. “The lender will do a standard document, but the emphasis is on the broker. It obviously helps if the fees are clear.” Malcolm Fitchett, business develop- ment director at Platinum Options, a London-based mortgage and bridging placement business, says brokers expect it to be able to assist in finding the best fit for their clients’ needs. “So transparency in terms of product and fees is essential to achieving this objective,” says Fitchett. “Customers are making a commit- ment that may be one of the largest financial transactions of their lives and that will shape their future. They seek clear and transparent terms with no hid- den or unnecessary costs, enabling them to make an informed decision often within a limited timescale.” For Scott, offering products that are
clear to both brokers and customers is key to becoming a reputable name in the bridging arena. “We've been in the business over 20
years and take the view that a reputation takes a long time to build up but can be ruined in a second,” he says. “We're motivated by that and treating customers fairly. We like to keep every- thing above board in a sector that hasn't always enjoyed the best reputation.” Of course, it hasn't just been the
guide to Bridging Finance 2012
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