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Critical problems for principals

With days to go before statutory mortgage regulation, we cannot but think we told you so. As long as two years ago, we the undersigned constantly told our lender panels, the industry and journalists of the likely outcome as to the number of firms becoming directly authorised (that is, 70 per cent of mortgage intermediary firms) but still requiring the help and support of a mortgage club.

Amazingly, some very big lenders have been predicting – and still are – the absolute opposite, that is, that approximately 70 per cent of mortgage intermediary firms will become appointed representatives of a principal.

Most principal firms have built their cost structure around signing up a certain number of ARs. The new principal networks are now likely to reduce in significant numbers as they find that, without the required critical mass, their income will not be achieved and their financial position will not be sustainable.

Maybe mortgage intermediaries have been smarter in their decision making than the FSA and maybe the FSA should not have issued so many grants of permission to networks.

John Malone

Managing director,

Premier Mortgage Service Mortgage Club

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