How to show value to the customer without going too far?
How to show value to the customer
Many DA brokers face the same conundrum when it comes to secured loans. How can they offer a valuable service to their customers without leaving themselves at risk of compliance failures or mis-selling? By their nature, DA brokers like to be in control of their sales. While networks may advise brokers to simply refer more complex cases, directly authorised intermediaries often want to stay involved.
It’s actually very easy to achieve this, if you partner with a good firm that clearly states where the responsibility for the sale lies both to you and, importantly, your customers.
If the broker wants to stay in control of the sale, a good master broker will offer them all the guidance they need to do so, including providing them with a checklist of questions to ask to ensure all bases are covered.
What’s more the partner firm will provide the broker and the customer with a letter which clearly states their role as a packager, outlining the fact the broker is ultimately responsible for giving advice.
This allows the brokers to show his worth to the consumer and keep control of the sale while still having the support and guidance to ensure he is not making any mistakes.
Many brokers use packagers in the first charge market when they go off panel and this process is really no different to that. Indeed, if anything, it is even more straightforward as, in the secured loan world, lenders require much more from packagers – including writing references and instructing the valuation – thus making the broker’s job even easier.
Make sure the firm you partner with prioritises compliance, and includes correspondence with customers in that, and you’ll be able to retain the sale with peace of mind.
2 out of 3 borrowers get a lower rate than our representative example of a regulated secured loan below:
Mortgages and Remortgages
£80,000 over 240 months at an APRC OF 4.3% and a discounted variable annual interest rate for two years of 2.12% at £408.99 per month followed by 36 payments of £475.59 and 180 payments of £509.44. The total charge for credit is £39,873 which includes a £995 broker / processing fee and £125 application fee. Total repayable £119,873.
Secured / Second Charge Loans
£63,000 over 228 months at an APRC OF 6.1% and an annual interest rate of 5.39% (Fixed for five years – variable thereafter) would be £463.09 per month, total charge for credit is £42,584.52 which includes a £2,690 broker / processing fee. Total repayable £105,584.52.
£4,000 over 36 months at an APR OF 49.9% (fixed) and an annual interest rate of 49.9% would be £216.21, total charge for credit is £3,783.56. Total repayable £7,783.56.
THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME
REPAYING YOUR DEBTS OVER A LONGER PERIOD CAN REDUCE YOUR PAYMENTS BUT COULD INCREASE THE TOTAL INTEREST YOU PAY. YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR ANY OTHER DEBT SECURED ON IT.
If you have been introduced to Promise Money by a third party / affiliate, Promise may pay them a share of any fees or commission it earns. Written terms available on request. Loans are subject to affordability status and available to UK residents aged 18 or over. Promise Money is a trading style of Promise Solutions Ltd. Promise Solutions is a broker offering products which represent the whole of the specialist second mortgage market and is authorised and regulated by the Financial Conduct Authority – Number 681423.
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