Brokers were holding lenders hostage before crunch'
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Turner: ‘Power that intermediaries held was probably in excess of where it should have been’
Countrywide group chief executive officer Grenville Turner’s comments at the Building Societies Association conference last week that mortgage brokers were holding lenders hostage in the run-up to the crisis have sparked outrage among some advisers.
Turner said intermediaries held too much power in the period before the credit crunch and it is a good thing that around half of mortgage lending is now direct.
He said: “The power that intermediaries held to influence lender decisions was probably in excess of where it should have been.
“What we needed was a situation where the intermediary sector is important, healthy and encouraging but not necessarily a dominant one and certainly not to the level that they can hold influence over the lenders.”
Turner added that he welcomes the change in the ratio of direct-only lending.
He said: “We have seen a change in direct mortgages and that is a good thing so that lenders should not be held hostage by intermediaries. I am all in favour of a healthy adviser sector but a healthy sector is one with a sensible, balanced relationship between the lender, the intermediary and the consumer and I am not sure that balance was there in 2005 and 2006.”
The Mortgage Practitioner principal Danny Lovey says: “That is ridiculous. It was the lenders that were always trying to go for market share and by using the brokers.” Emba group sales and marketing director Mike Fitzgerald says: “Turner does have a point when he says a fairer distribution of mortgages around
50/50 is a good idea but with branches closing, you need a good mix of brokers. Otherwise, the only people who suffer are the consumers.”
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