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Loan firms predicting demise of packagers

A large number of packaging operations will disappear in the new regulated environment as transparency measures expose what they are earning, warn mortgage intermediaries.

Park Row Mortgages managing director Kevin Paterson says new disclosure rules mean that brokers can see the exact fee that a packager takes on every piece of business under the new rules, which could lead to more brokers opting to deal directly with providers.

Purely Mortgages chief executive Mark Chilton believes the role of packagers – particularly non-regulated operations – will diminish significantly in the next 18 months.

He says sub-prime lenders are increasing the credit checking technology available to brokers online which simplifies the process for brokers doing business direct and reduces the need for a packager.

Intermediaries are also concerned about monitoring the information they get from packagers. Park Row has opted to mandate one packager to provide a comprehensive record of advice given to help them build a more accurate audit trail for compliance purposes.

Paterson says: “Firms who thought they were getting a good deal will find that their packager has been taking half their proc fee.”

Chilton says: “I predict that non-regulated packagers will virtually disappear.”

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