Mortgage advisers instructed to disclose bank fees

THE governing body of Ireland's independent mortgage advisers has instructed its members to disclose to customers the fees it receives from banks and other lending institutions.

The Independent Mortgage Advisers Federation, which controls 70% of the mortgage brokerage business, said all members would have to comply in order to retain membership.

IMAF president Michael Dowling added that, despite assertions by the Consumers Association of Ireland, his organisation had no difficulty in ensuring their customers had full disclosure.

"We are on record as saying that we want full disclosure of fees. All our members are now being advised to give that information in writing to customers. We are the first group of mortgage brokers to do this."

Earlier yesterday, the Consumers Association hit out at mortgage brokers and said that Tánaiste Mary Harney had failed in her duty to protect house hunters who use the services of mortgage intermediaries.

"Mary Harney has failed in her duty of care to mortgage consumers. The Department of the Enterprise Trade and Employment has acted in cahoots with banks, building societies and so-called independent mortgage advisers.

"She has failed to force them disclose the fees they receive from lenders," Eddie Hobbs, spokesman for the association said.

Under the Consumer Credit Act, introduced by EU directive in 1993, the minister for enterprise has the power to force mortgage advisers disclose to their customers the fees they get from lenders.

That particular piece of legislation has never been enforced.

Responsibility for the act has, since May 1 last, been taken over by the Irish Financial Services Regulatory Authority.

Its director, Mary O'Dea, has been holding meetings with mortgages brokers over the past few weeks and she is expected fully to enforce the legislation before the end of the year.

However, 900 other brokers who are not members of IMAF are still free to refuse disclosure, a situation the Consumers Association wants rectified immediately.

"Mortgage brokers cannot claim to be truly independent when they get different levels of fees from different lenders," said the CAI's Eddie Hobbs.

"Some of them have only dealings with one or two mortgage lenders. There is nothing independent about that.

"They also claim to provide free advice to customers. That is nonsense. There is nothing free about it. The consumer pays in the end."

However, IMAF said its members differed fundamentally from other mortgage brokers by having a minimum of five agencies.

"All our members receive a flat 1% fee from lenders," IMAF president Michael Dowling said.

The total mortgage lending business is worth almost €11 billion a year.