Up to three-quarters of intermediaries and half of all lenders could be forced out of the market if the FSA fails to regulate mortgage advice, warns the Council of Mortgage Lenders.
CML director general Michael Coogan says if intermediaries are not authorised, then the responsibility for monitoring the disclosure of brokers will fall on the shoulders of lenders. This could heap unsustainable costs and more work on lenders and IFAs.
He made the explosive remarks at the annual CML conference in the wake of the FSA consultation paper on mortgage regulation.
Coogan's comments have confirmed the worst fears of small IFAs in particular who have long expressed concern they face being squeezed out of the market. This now seems a real possibility as lenders will not be able to afford to monitor the disclosure of intermediaries who only do a small amount of mortgage work.
Current plans rely on lenders to police advisers within a tighter disclosure regime. But some in the industry fear this could leave intermediaries answerable to more than 100 lenders, which they say is unworkable.
Coogan said: “If lenders are made responsible for disclosure, then intermediary firms may go down by 50-75 per cent and the amount of lenders may also halve, leading to a reduction in consumer choice.”
Chase de Vere Mortgage Management managing director Simon Tyler says: “It is slightly alarmist but draws attention to the issue. If lenders are in charge of compliance,it will be time-consuming and impractical. The FSA says it wants a light touch. This is by no means a light touch.”
A Treasury spokesman says: “Very careful consideration was given to how an accountable regime would operate. We are satisfied this should replicate information flows in existing best practice between lenders and intermediaries.”
FSA spokesman Andy Flem ing says: “We are aware there are concerns and we specifically ask for views on this in the consultation paper. Our concern is to ensure that consumers get accurate and tim ely information.”