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CML fears over lenders&#39 role as de facto brokers

The Council of Mortgage Len-ders is seeking clarification from the FSA over proposed mortgage regulations which could force lenders to act as de facto brokers.

The trade association has written to the regulator after fears were raised that lenders may have to compare all mortgage deals offered to a borrower before accepting an application as part of the FSA&#39s disclosure requirements.

The new rules could force lenders to check the presale illustration documents of rival providers to ensure that a borrower applying to them for a mortgage is choosing the most suitable deal.

The proposals have led to fears that lenders could bec-ome snowed under with reams of product information – at least five pages for each mortgage – which, as providers, they would be unable to compare fairly or effectively.

The news comes after the FSA stunned the industry in June by issuing proposals for regulations giving lenders responsibility for ensuring that brokers provide borrowers with the correct product information.

Scottish Amicable national mortgage manager John Malone says: “How will a lender be able to compare the products of other providers? Will this type of procedure change if an intermediary is only giving information? We need a much clearer understanding of how this will work in practice.”

A CML spokesman says: “We are discussing with the FSA what these measures will mean in practice and are currently in the process of working out the requirements.”

An FSA spokeswoman says: “I do not believe lenders are that concerned at the moment. The proposals would not take effect in every single case.”

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