Second charge industry urged to adopt flat application fee

In May, Complete FS unveiled its new charging structure for second charge loans which replaced a Master Broker fee with a flat application fee of £199 plus valuation and legal fees.

The Loans Engine also scrapped its Master Broker Fee last month, replacing it with a £295 flat fee.

Complete FS Director, Tony Salentino, said: “We are delighted to see that some master brokers have followed our lead by cutting fees, but many have not or have made only cosmetic changes. We believe that the right course of action is for the industry to renounce the old fee structure and introduce a flat application fee. We charge £199 along with the lender’s valuation fee and disbursements on all second charge cases. There is no Master Broker Fee and the intermediary determines the advice fee to be charged.

"What is important is that the client can see exactly what he is paying for. Advisers now have more clarity which means that they can confidently compare a first charge remortgage more clearly with a second charge loan. Costs are going to come under the microscope and if the second charge sector is to continue to grow, then reduction of fees and more transparency are going to be very important in persuading first time adviser users to properly consider a second charge option for clients. There are plenty of good reasons why a second charge loan is suitable, but costs are a major factor in that calculation.”