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FSA warns of return to aggressive dual pricing

Funding pressures in the mortgage market could trigger the return of aggressive dual pricing strategies, the FSA is warning.

The regulator has today published its retail conduct risk outlook, which analyses the main risks facing consumers and firms over the next 12 to 18 months.

The report says that mortgage intermediaries, and networks in particular, continue to face a number of market challenges.

It says: “Survey findings suggest that the persistent uncertainty in market conditions continues to have an impact on mortgage intermediaries. This reiterates concerns that developing and maintaining a sustainable and compliant business model will likely remain challenging for mortgage intermediaries, particularly for network models.”

It highlights dual pricing as a particular threat to brokers.

The report says: “At an aggregate level, mortgage intermediaries are challenged by competition from lenders’ direct sales with further funding pressures in the mortgage market potentially triggering a return of the aggressive dual pricing strategies seen in 2008 where lenders offered more competitive products via their branches.”


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There are 10 comments at the moment, we would love to hear your opinion too.

  1. I would obviously challenge banks dual pricing strategies but fundamentally, they are leveraging thier brands to draw punters through the branch network. How many clients walk into a halifax branch and sign up when if they looked beyond their nose the could get a better rate from another lender. Dual pricing only increases search engine based traffic for lenders so they can’t use the excuse that they get more footfall in branch.

  2. Nottingham Building Society 5 year fixed via their intermediaries 3.99% with £800 arrangement fee, £199 booking fee, free valuation and legals. Direct? 3.19% £1499 arrangement fee, £199 booking fee. How can this be treating customers fairly? It is obvious we have to advise them to go direct despite the fact that it is our experience with lending criteria which has led us to recommend them as a lender.

  3. At last, maybe they do listen.

    You never know they may even do something about it!

  4. It would be really nice to read a press release from Canary Wharf that was factual and took ownership of many of the problems they have caused instead of placing the responsibility on those that have been affected. When will the light bulb come on and these people be held accountable for the chaos they cause. Truly ironic that this is published on the same day that the issue of pressure selling through banks is identified as a key area of risk based on their highly costly research even though this has been obvious to anyone who has ever visited a bank.

  5. As DA brokers that will always offer best advice we can not submit business to NatWest, Abbey or Halifax at the moment as the pricing differentials are huge in branches favour!
    Woolwich, Northern Rock & the Building Society sector can not cope with all broker business so lets hope the FSA get tough on such anti-competitive practices!!!

  6. Lets all grow a pair and refuse to do business with dual pricing companies. They have to decide whether they support us or are against us. If a client asks why you are not recommending a dual pricing company just tell them that the service levels are appaling and they will not get the mortgage

  7. Trevor Johnston 13th March 2012 at 1:57 pm

    A small building society phoned me last week to inform me that they were bringing out a direct only 95% LTV product. They said they have been advised by the FSA that they are too dependent on the broker market and need to obtain more customers through the branch. The building society explained to the FSA that the only way they could do that would be to dual price and the FSA were perfectly happy with this suggestion. So the FSA support dual pricing?!?!

  8. I have little to no respect for any mortgage lenders after the way they have treated the broker market. They particularly want naive young first time buyers, who they can ‘stitch up’ for all their expensive and often unnecessary insurance products. The FSA are a waste of space and concentrate on attacking IFA’s, when if they concentrated on the real ‘mis-sellers’ i.e. the banks, then financial services in the UK would be in much better shape. However, that would never happen as they’re in the banks back pockets.

  9. Financial markets are typically defined by having transparent pricing, basic regulations on trading, costs and fees and market forces determining the prices of securities that trade.Making money in a consistent way in today’s market with proper guidance for taking informed decisions is the key demand of the investors.
    Assistance in identifying the exact market through its daily, weekly, monthly, quarterly and yearly charts with added benefit of procuring a comparative study of the correlated markets today is a factor of high importance.The assurance of getting minute to minute updation on all critical levels with its notifications sent through emails and sms definitely can help in moving towards the main goal.
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  10. An initial ‘saving’ for the customer but in the end the customer will have their ‘eyes wiped’by the lenders on buildings & contents, life & critical illness cover etc. No doubt these products will not be competitive (remember PPI etc?) and the customer who went direct will pay and pay and pay. What ‘consumer’ doesn’t realise is that brokers are and have been the custodians of good advice and fair mortgage rates. Without us to ‘police’ the lenders,always obtaining the best deals for our clients and being the main source of mortgages for the lenders,has made the lenders offer competitive rates to obtain businessand maintain market share. Without us, mortgage rates would be much higher.They have high overheads to coverstaff, buildings, running costs etc. but we are only paid for the production of a mortgage which can involve up to 6-8 hours work fact finding, comparing all lenders deals, completing application forms, general paperwork, obtaining underwriting requirements, processing & follow up. Therefore what they pay us for the procreation of a mortgage is negligable and the saving to them in time & expertise – a lot. Loose us at your peril!

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