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AMI fears lender regime will kill off independents

Concerns growing that FSA plans could force lenders to shun mortgage intermediaries

The independent mortgage broker market could be wiped out if the FSA goes ahead with plans to make lenders police intermediaries.

The Association of Mortgage Intermediaries says the regulator is trying to pass responsibilities to police brokers on to lenders under its treating customers fairly regime.

Director general Chris Cummings is calling on the mortgage industry to stave off the threat and he wants talks with the Council of Mortgage Lenders and the Intermediary Mortgage Lenders’ Association to help persuade the regulator to rethink its strategy.

Cummings says: “It would be anti-competitive and change the balance of power. If we get this wrong, it would be the death of the independent intermediary sector.”

The concerns are that the cost of policing brokers and the burden of being responsible for advice will see lenders moving to the direct route.

Accord Mortgages managing director Linda Will says FSA examples of good and bad practice under treating customers fairly indicate lenders policing inter-mediaries is used an illustration of good practice.

Cummings says that the FSA’s 2006 Financial Risk Outlook also makes similar suggestions.

Will says: “I do not think the FSA ever thought that they would end up with as many regulated firms and how difficult it would be to police them. I think they are using TCF to fill in the gaps where Cob does not work. This could make the intermediary model less attractive to lenders, who will go direct.”

The FSA mooted the idea of lenders policing brokers in a June 2001 consultation paper on mortgage regulation which was not implemented.

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