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.