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FCA warns advisers are liable for unregulated packager advice

The FCA has warned the mortgage industry that unregulated packagers are “overstepping the mark” by straying into advice and told advisers they will bear the liability for advice given by unregulated firms.

Speaking at the Financial Services Expo in London yesterday, FCA director of mortgages Linda Woodall said while there are fewer packagers in the market today than pre-crisis, the regulator was hearing of cases where “some of the unregulated firms still active may be overstepping the mark and may be undertaking regulated activities.”

She said: “I believe our regulatory position on packagers is clear. So long as the packager has no contact with the customer and runs a business-to-business operation then they do not need to be regulated. But where a packager deals with customers directly, they need to be regulated and ensure that staff have the necessary qualifications.

“It is important intermediaries realise where a packager is not regulated but offers more than a B2B service, the intermediary is ultimately responsible for any advice given to the consumer and I question if this is a good position for intermediaries to find themselves in.”

Woodall’s comments echo a similar warning made by Association of Mortgage Intermediaries chief executive Robert Sinclair, who in July said packagers and specialist distributors must decide to either train their staff and become regulated, or make it clear they only deal with brokers. 

Sinclair said at the time: “There are some people who take fees from consumers at the moment but appear to be saying they are not regulated – in the new world of the mortgage market review this cannot prevail.”

“The issue is whether they are going to redefine their business to business contracts or are they going to firmly put themselves in the consumer space and do the job as advisers.”

All Types of Mortgages managing director Dale Jannels, who runs a regulated packager, says: “Those packagers who take on customers on behalf of the broker need to be very careful. They need to get their house in order and revise exactly what they are doing before April when the MMR comes in. That way there is no misunderstanding.”



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  1. I have never used a packager and indeed am rather irked when forced to use a mortgage club. I always deal directly and find that these organisations just add cost. Their USP is to boost commission (or proc fees as the mortgage market likes to call it). As far as I’m concerned they (the Clubs) do absolutely nothing for their money and I have the unenviable task of trying to explain to the client why they appear at all. I charge fees so their financial inducements don’t cut any ice.
    As far as packagers are concerned, excuse me for asking, but don’t they exist because intermediaries are too idle to do the work themselves? Or have I got this wrong and they provide an invaluable service that no adviser is able to offer?
    Could it possibly be that one of their functions is to shoehorn applicants into a loan they otherwise would never have got? In which case one might wonder if the MMR wouldn’t put a stop to that anyway.

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