View more on these topics

‘Hypocritical’ CML in attack on brokers

Leading mortgage brokers have slammed the Council of Mortgage Lenders’ “hypocritical” attack on intermediaries as the FSA suggests that proc fees may be scrapped in favour of adviser charging.

The CML used the FSA’s mortgage conference this week to launch a fierce attack on small mortgage brokers. Head of pol- icy Jackie Bennett said stricter authorisation standards and higher capital and professional indemnity requirements were needed for brokers who she claimed “acted more like salesmen interested in maintaining their cashflow than advisers protecting their customers’ interests”.

Speaking at the conference, PMS managing director John Malone it was lenders who crea- ted the current distribution model, paying brokers 300 to 600 per cent more for specialist business. “The blame should not be put on a lot of the hard-working, decent intermediaries out there,” said Malone.

Association of Mortgage Intermediaries director general Chris Cummings said smaller intermediaries were the “lifeblood of our industry”.

He said: “I am not interested in what the CML has to say. If they think by clustering intermediaries they can exert some regulatory power over them, that worries me hugely. We need to get past this blatant name-calling by lenders against int- ermediaries. It is disappointing that someone who leads their trade body is still stuck in the feedback loop that is blame the intermediary.”

The Mortgage Warehouse managing director Tim Lee says: “This hypocritical attack is a bit rich coming from the CML. It has proved from its actions it wants to have its cake and eat it.”

At the conference, FSA director of retail policy and conduct risk Dan Waters warned the FSA would look at scrapping proc fees and reading across the retail distribution review’s work on adviser charging to mortgages”We must consider whether such a structural intervention in the mortgage market might deliver similar benefits to consumers,” said Waters.

Waters said, particularly in high-risk sectors, some brokers were putting remuneration above client needs, leading to product bias, churning and targeting consumers with poor credit histories.

He said the regulator was also looking at applying stricter regulations to non-advised sales as consumers are not clear about the difference between advised and non-advised.

FSA managing director of retail markets Jon Pain suggested it may have been a mistake for the FSA to allow self-cert for employed customers and it may require income verification on all mortgages. He said the sales disclosure regime needed to be overhauled, with more oral disclosure, a cooling-off period or a restriction on high-risk products’ possible outcomes.

Pain said the FSA was worried about unregulated firms buying up distressed mortgage books.

Recommended

Buy-to-let RMBS arrears rocket

UK buy-to-let delinquencies on mortgage backed securities increased significantly during Q1 2009, according to Moody’s Investors Service.

Manager focus: Anne Gudefin

Soon after the Korean crisis in 1998 people were seeing their dentists and asking to have gold removed from their teeth to sell, recalls Anne Gudefin, the co-manager of the Franklin Mutual Global Discovery fund. While the countrys economy may have been battered, that was the time to buy shares, she says. For example, in […]

Niche quarter for ethical funds

Ethical funds saw a strong rise in the first quarter of this year with net sales of 45.2m, a significant rise from the previous year’s 26.6m, although down from the previous quarter’s 54.8mThe latest statistics from the Investment Management Association show that net sales of funds of funds were 378.4m, up by 65 per cent on the previous quarter but significantly lower than the 647.1m seen a year earlier.

Unemployment continues to soar

The number of unemployed people in Britain has hit 2.2m, according to the Office for National Statistics (ONS).In the first three months of the year the British unemployment rate climbed to 7.1%, up 0.8 percentage points from the fourth quarter of last year and a rise of 1.8 percentage points on the same quarter in […]

Simon Fletcher

Auto-enrolment: pay attention or pay the price

By Simon Fletcher

As a chief executive officer of a business in the financial services sector, I have been dealing with the introduction of auto-enrolment for our clients for some time, but I can also speak from an employer’s point of view, having to go through the process ourselves.

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

    Leave a comment