A secured loans packager has defended its new sales incentive scheme offering mortgage brokers bottles of champagne and iPads for business it receives from them.
The Lending Wizard, a sourcing tool ran by packager Freedom Finance, is offering brokers an iPad Mini, Kindle Fire or iPhone 5 for every secured loan they complete.
Secured loans are regulated by the Office for Fair Trading but will come under FCA regulation from April. The Lending Wizard says it will review the scheme in April to ensure it is compliant.
The firm denies the scheme falls foul of FCA rules despite tough rules on override commissions and a recent crackdown on bank sales incentive schemes.
In a series of prizes, brokers using The Lending Wizard will receive a bottle of champagne if they complete a secured loan within 30 days.
The “top introducer” each month will take home another bottle of champagne while the broker of the year will get an unspecified “grand prize”. Brokers will also be given £50 cash for referring friends to the system.
The Lending Wizard says introducers of the month and year are not judged purely on sales but on a range of factors, although there is no “defined criteria” behind the process.
It denied it amounted to an override commission, which reward introducers for the volume of business they send to packagers and are banned by the FCA.
Industry experts say brokers would need to ensure they disclose prizes to customers when arranging the loan.
The Lending Wizard business development manager Gareth Broome says: “The scheme does not focus on nor promote indivudual products from The Lending Wizard. Our scheme provides ‘rewards’ to brokers based on a variety of criteria with the end goal of creating an effective relationship of trust between the customer, broker and packager.
“Its aim is to help us to build good relationships with the broker community and it is not in any way a financial incentive or commission.”
The system has a panel of lenders including Central Trust, Masthaven, RateSetter, Sainsbury’s Bank, Zopa and Nemo.
It also includes Blemain Finance, Creation, Prestige, Everyday Loan, Shawbrook and Norton Home Loans.