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L&G fears CP121 will limit scope of advice

Legal & General says the Treasury risks restricting the scope of advice available to consumers if it applies the FSA&#39s CP121 proposals to the mortgage sector.

L&G is concerned that CP121 would create a limited mortgage distribution model, where advisers sell from a small number of lenders rather than giving borrowers access to the entire market.

It supports the current model, where brokers can be independent for mortgages while tied to a life company, but fears that this will no longer be possible from 2004, when statutory regulation comes into force.

It says forcing independent advisers to be remunerated under the defined- payment system would remove the current form of income generation from procuration fees.

L&G emphasises the importance of a smooth transition from the regime created by the Mortgage Code Compliance Board to the FSA&#39s regime in 2004.

One of its main concerns over transition is whether the current timetable provides an achievable time- frame for the industry to be ready for regulation.

Director (housing marketing) Stephen Smith says: “If the Treasury is not careful about where mortgage regulation fits under CP121, it could create a distribution model which is restrictive.”

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