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CML policy chief&#39s secret letter urges sub-prime probe

The Council of Mortgage Lenders&#39 senior policy adviser is secretly urging the FSA to closely monitor sub-prime brokers and the top 50 mortgage intermediaries in the UK.

In a letter seen by Money Marketing, CML policy chief Kate Main presses FSA head of mortgage regulation Sarah Wilson to keep close tabs on brokers in the “highest-risk” areas of the mortgage market. Main marks out the sub-prime and non-conforming markets for particular attention as she is concerned the high commission levels paid in these sectors can influence brokers&#39 recommendations.

The letter pushes for the FSA&#39s regulations to ensure regular compliance visits are carried out on the biggest 50 mortgage intermediary firms, as she believes this would cover the vast majority of the market.

Main suggests punishment for brokers for breaking compliance rules should be as severe as their removal from intermediary panels, which many lenders use as a major distribution channel. All lenders would be alerted to the breach if it was regarded as serious enough.

Pink Home Loans managing director Peter Presland says: “Placing a sub-prime borrower involves more work, so it is fair that higher commission is paid. If Main wants this market to be targeted on that basis, she should be specific about any abuses.”

FSA press office manager Rob McIvor says: “We will consider all the points and suggestions before drafting final rules.”

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