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DTI to review fees for rejected loans

The DTI has pledged to review the Consumer Credit Act following industry complaints over the maximum fee brokers can charge for giving advice on rejected mortgage applications.

DTI director of consumer affairs Fiona Price has agreed to review the maximum£5 fee that brokers are permitted to charge clients under the 1974 Act after coming under pressure from Scottish Amicable national mortgage manager John Malone.

In a move welcomed by the Mortgage Code Compliance Board, Price is understood to be considering raising the fee ceiling to reflect the number of hours brokers spend advising clients on loans which lenders subsequently turn down.

Price came under pressure at the Council of Mortgage Lenders&#39 regulation conference in Birmingham last month by Malone and CML director general Michael Coogan who said the 27-year-old rule inadequate.

In a letter to Price last week, Malone said brokers should get up to£150 for abortive mortgage work on the basis that brokers can spend up to five hours with a client with no redress. The letter states: “I speak for thousands of intermediaries who firmly believe the maximum amount of£5 that can be charged should a mortgage application not proceed is now totally out of date.”

A DTI spokeswoman says: “The Government is looking at its CCA priorities and the review will try to ensure that the Act remains relevant to the modern market.”

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