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FSA’s Hector Sants says mortgage dual pricing does not breach TCF

FSA chief executive Hector Sants has told the Building Societies’ Conference in Manchester that dual pricing is not against TCF.

Sants told the conference that brokers had asked the FSA if the practice was fair but his answer was that lenders are not obliged to deal through brokers.

The view will dismay many brokers who have suggested that the practice, which been increasingly prevalent in recent weeks, may be against the TCF rules.

Sants said: “I would also like to mention that we are becoming increasingly aware of changing market dynamics that are putting pressure on mortgage intermediaries as some lenders are only offering certain deals directly to customers. We have been approached by a number of intermediaries asking whether this practice is fair under TCF. Our response is that lenders are not obliged to deal through brokers. How they choose to price their products is a commercial matter.”

Sants said that the market had always included some lenders which chose not to distribute through brokers and other lenders which had offered special deals.

He said: “There have always been certain lenders who choose not to offer their products through brokers, and others who differentiate pricing depending on channel, for example those offering ‘exclusives’ to certain mortgage clubs or special interest-only rates. If follows from that not every product on the market will necessarily be available to any one broker – something which our definition of whole of market takes into account. If certain lenders decide to offer their direct customers cheaper deals, we do not see that customers’ best interests would be served by preventing this.”

Sants also said three risks the FSA had identified to the building society sector included excessive concentration on the buy-to-let market, continued acquisition of mortgage books even when routine funding was becoming problematic and poor understanding of the risks of exposure to commercial borrowers.

Comments (13)

The guy’s lost the plot. He’s supposed to be the upholder of the consumer’s interests. He seems to be happy to see the broker market decimated so that lenders can once again operate their own lending club without the external competition forces provided by brokers.

Mind you, he’s probably not too concerned as it seems the bigger the mess a top director makes the bigger the cheque they get when booted out!

Tony Joannou

I’m sorry- but if the FSA are regulating me as an independent financial adviser who is expected to obtain the best product for his client, whether through fees from the client or by procuration fees, how does the FSA expect me to find the best deal for my client short of calling every lender in the country to find what rate my client gets if he goes direct. This is absolute and utter rubbish and is the usual FSA doing nothing for the intermediary channel- the most reliable of all the methods of conducting business. I demand an answer.

Dave King Partner A.S.K. Independent Consultants LLP Glasgow.

The lenders are being very cute. I have done research using mortgage sourcing software and told clients to go direct on some deals that are only available that way. Can I now charge a fee? Thank god I am not reliant on mortgage business for a living.

Nick Bage Bespoke Financial Management Limited

I totally agree with Tony and only hope someone at the FSA wakes up and smells the roses before the intermediary channel is destroyed beyond repair.

David Gallagher Appletree Financial Solutions Ltd

Does this person realise exactly how bad it really is? This is not just a few rates which are lower than we can get, we are being totally outpriced by most lenders.

This is not fair to the public many of whom don’t know one end of a mortgage from another and need proper advice. Are these people to be offered sub standard products then? How can this be fair?

If anybody else says that we should deal directly with the branch, then they obviously haven’t tried it. We have no access to KFIs for direct deals and therefore that totally cuts us out of the market for dealing direct and charging fees. This is because of the regulation brought about by the FSA, something else which is being taken advantage of by the lenders.

Perhaps the lenders just want to “ be seen” to have reduced their rates to keep the Bank of England happy, although they have absolutely no intention of actually lending to most of the public on their reduced rates. It’s time the people who make the rules spent a bit of time at ground level and actually saw what is going on in the real world.

Claire Cook Cert PFS CII (MP) director Talk Money Limited

Hector Sants and the FSA are missing the very point of TCF and that is the cheaper rates should be available to intermediaries from lenders. The cost of distribution is significantly less and therefore if anything intermediary deals should be cheaper than branch based. Hector Sants is allowing himself into an orchestrated plot and has failed miserably in his interpretation of TCF – how about referring him to Enforcement?

Ray Randerson cert.PFS cert CII(MP) Active-1

Well, What goes around comes around!! When the market improves (which at
some point it will), how are Bank chief exec’s going to justify to their
board why the intermediary market won’t provide any mortgage business to
them!! I know most brokers will avoid these lenders like the plague.
Short terms gains for these players will equate to a long term loss in
introduced business. Shame on you!

Joe Hill
Independent Life & Pensions Group

Just who is Hector Sants answerable too? I feel while we replaced the local Sheriff (PIA/ FIMBRA) with a federal marshall (FSA) what we see is that it cant decide how to be impartial; J Edgar Hoover comes to mind. Just watch they will backtrack on RDR and cave into the banks and the big money like SJP. They sometimes talk the talk but they never walk the walk.

Martin Mcnamara


You are shooting at the wrong target – FSA are not an economic regulator so pricing is outside their brief – TCF is not about pricing!

Rob Hayes
Provience Ltd

Unfortunately the wording of T.C.F. which for the lender’s understanding means Treating Customers Fairly does not seem to apply. They are now it seems trying to monopolise the market and taking customers back into the dark ages of ignorance, lack of understanding and knowledge which to my information most brokers provide regardless of F.S.A. rules that is why we as brokers in the majority survive on repeat business. This is based on a simple equation the clients on the whole trust the broker ask the same question of these same lenders who are not using the F.S.A rules of T.C.F.

Dermot Whelan

Sorry Rob it’s you that missed it. Pricing is very much on the FSA remit. That is why they are so ‘clever’ when it comes to us being paid and not when it comes to them. Pricing is very much on the table in TCF and you have missed it thinking it is not. Look at it more closely.

The FSA are powerless to do anything about this. Don’t forget their target is the broker not the providers. We are the ones difficult to police and the providers would rather we were out of the equation anyway.

You can download KFIs for direct products and now for once do your jobs the way they should be done and charge a fee for your work. Dump reliance on the providers…they are not your friends and certainly not friends for your clients either. Beat them at their own game and sod them.

Roddy McKenzie Omega Consulting

You can’t get KFIs for many of the direct products, which really puts us out of the picture as far as advising on these products and charging fees – this is one of the problems.

Claire Cook Cert PFS CII (MP) director Talk Money Ltd

Have a client with a C & G product due up at the end of the month, limited
market so contacted C & G local branch to find out what options they could
offer. I was told that the client would need to make an appointment to visit
the branch to discuss this as the branch staff needed to ensure that the
client had the correct Life assurance, critical illness cover and income
protection in place! Orders from above. This client was introduced to them
and now they want to get him in a dark corner and sell him a financial
product as an incentive to get a new deal. Sounds a bit pressurised to me.
What do you think Hector would say about that!

Kind regards,

Simon Jenkins Positive Solutions


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