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Affordability role could see lenders buy distribution

Home of Choice chief executive Gerry O’Brien considers that as mortgage lenders will have to take ultimate responsibility for affordability, they will want to have greater control of the process and may seek to buy up distribution.

At the Money Marketing round table, O’Brien said the FSA mortgage market review proposal to put lenders in charge of affordability could
significantly change their relationship with intermediaries.

He said: “The big question for me is lenders and their definition of affordability and how they look at advisers in the future.

“They will say, wait a minute, if we have to take full control of affordability and intermediaries are going to have responsibility for preliminary affordability, given that many lenders already have stakes in distribution, they will say, why don’t we just own it?”

But Chartered Insurance Institute’s Society of Mortgage Professionals chief executive Richard Fox dismissed the idea that lenders would want to buy up distribution.

He said: “They have been there before and they lost a shedload of money through estate agency ownership.”

Nationwide for Intermediaries head of corporate accounts Paul Howard said: “I cannot imagine a regulatory situation at the moment where we would want to get into owning distribution. When you look at the quality of business that comes in through appointed representative and directly authorised routes there is very little difference, so we are very happy to carry on dealing with both those routes.”

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  1. Gerry O’Brien’s comments prove that he does not know what he is talking about in relation to lenders. There is not a cat in hells chance of lenders buying distribution and as Richard Fox rightly points out, nearly all of the non conforming lenders bought stakes in brokers and networks and it failed massively.
    Stick to running a network Gerry.

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