Warning on fee for service charges

In a red-hot mortgage market, a growing number of clients are using an adviser to source a low rate, and using that rate to negotiate better terms with their bank.

After ditching the adviser and sticking with their bank, some borrowers have been shocked to learn they are subject to "fee-for-service" charges, the Financial Services Complaints Limited boss says. 

"More people are sourcing a loan through an adviser, deciding not to proceed, and staying with their existing banks. However, in these situations, advisers are perfectly entitled to charge for their time," she adds.

"From time to time we see clients acting badly, and trading off advisers with their banks. We've seen some complaints about it as clients are unaware they could be charged a fee if they didn't proceed with the loans."

With more clients playing off advisers against banks, Taylor warns advisers to make sure their agreements are clear and charges are outlined, leaving no room for ambiguity. 

"Advisers are entitled to be paid for their time provided they are clear about it," she says. "Point it out to the client at the start, and explain. The vast majority of people understand advisers need to be paid, provided they know about it. Most people are perfectly comfortable with advisers earning a fee like any other professional, like a lawyer or accountant. Advisers don't need to be shy about letting people know fees will be payable."