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Boulger says lenders should offer compliance services

Lenders will cut the number of intermediaries they distribute through after the onset of FSA regulation in 2004, according to Charcol senior technical manager Ray Boulger.

Speaking at the BSA conference last week, Boulger said lenders will be likely to deal primarily with bigger brokers they are confident will meet compliance requirements.

He said mortgage clubs such as those run by Legal & General and the Prudential Premier Mortgage Service should look at doing more than generating “higher procuration fees for small brokers”. He thinks clubs should offer compliance services, similar to fully-regulated service networks, to “offer comfort to lenders”.

Boulger also warned of dangers of misselling in the equity release market as he clai-med current rates of interest often mean it is “nonsense” to release a lump sum of equity from a house to invest.

He gave the example of a borrower being advised to release equity at an interest rate of 7.5 per cent, which is common for equity-release products, to only get a return of around 4 per cent on their investment.

He suggested this could be tackled by allowing people to take monthly drawdowns on equity release rather than lump sums.

Boulger said: “A lot of lenders will want to reduce the number of intermediaries dealt with.”

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