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Lenders may have to adjudicate on broker standards

Lenders may be made to act as referees for brokers under a proposal for stricter registration standards for those conducting mortgage business.

The proposals, which would see the Mortgage Code Compliance Board insist on lender references on the competence and character of brokers, could lead to a drop in the number of advisers staying in the mortgage market.

Other plans under consideration for a new authorisation process for 2001 include taking into account county court judgments and character references from magistrates or people in positions of responsibility who can vouch for the intermediary&#39s integrity.

These criteria would be considered in addition to compulsory examinations.

The MCCB says the current registration standard, which asks for every appli-cant to have professional indemnity cover or capital of 50m and licensing under the Consumer Credit Act, is too low.

Tighter controls could see the number of authorised brokers fall from the current levels of 38,000 advisers and 12,000 firms as non-special-ists exclude themselves from the market.

MCCB chief executive Luke March says: “My instinct is that the moment you raise standards brokers will analyse themselves in terms of whether they want to remain in the marketplace or not.”

Brokers are expressing concerns on the principle and logistics of lender references.

Baxter Business Consultants partner Nick Baxter says: “The Government has said lenders are responsible for intermediaries being compliant.

“This fits in with that plan but I would be concerned if lenders became judge and jury. One lender could have different experiences of abroker than others.”

Calkin Pattinson and Company consultant Kim North says: “In theory, it is a good idea. In practice, it will not work. Brokers have a relationship with one or two individuals at a lender who typ- ically leave very regularly.

“What you end up with is no one in a strong enough position to vouch for the broker.”


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