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Dual route is road to conflict

FSA chief executive Hector Sants’ comments on mortgage dualpricing at last week’s Building Societies Association conference make the FSA’s position on the matter clear.

Sants told delegates that lenders were not obliged to deal with brokers, that how they price and distribute their products is a commercial matter and that the recent trend of dual-pricing does not breach treating customers fairly rules.

The comments were designed both as a response to the increasing anger among advisers and with possible complaints to the Office of Fair Trading by the Association of Mortgage Intermediaries and other organisations in mind.

Sants went on to say that he hopes the current trend towards dual-pricing does not stifle a healthy market where consumers have a choice of direct and intermediary channels or make it harder and more expensive for customers to get advice.

The problem is that, for many, the choice is no longer there. Brokers have been priced out of the market and in a huge number of situations are having to advise clients to go direct for the better deal.

Perhaps a complaint to the Office of Fair Trading on the grounds that lenders are breaking competition law could succeed as the FSA believes this issue is outside its remit.

But rather than fighting a drawn-out battle, is this not a chance for forward-thinking lenders who realise the long term benefit of a vibrant broker market to show greater support in these times, knowing this loyalty will be repaid?

What better way to highlight their commitment to a sector that provided 70 per cent of their business last year than for lenders to dump dual pricing?

As Charcol senior technical manager Ray Boulger said at last week’s BSA conference, brokers will remember the current actions of the lenders. As he went on to say, this will not mean brokers excluding lenders to the detriment of a client, but when there are comparable deals, lenders’ current actions could be a factor.

The FSA needs to move quickly to address regulatory barriers that are stopping many advisers from charging a fee to advise a client on a direct deal.

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