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Loan firms&#39 fury at panel claims of biased advice

The Financial Services Consumer Panel has clashed with the mortgage

industry for claiming that new FSA rules will stamp out “faulty and

downright biased” loan advice.

Speaking at last week&#39s Council of Mortgage Lenders regulation conference

in Birmingham, panel chairman Colin Brown said FSA proposals would help

borrowers detect advice skewed by commission bias.

He said the panel was pleased the FSA was heeding its advice and charging

lenders with the responsibility of ensuring borrowers get the right product

information before taking out a loan.

But his views have angered the mortgage market, which has accused Brown of

scaremongering and encouraging the FSA to ignore industry fears over the

impact of the proposals.

Pretty Technical Partnership partner Kim North has slammed Brown for

bandying around unproven accusations of widespread bad advice and is

calling on him to produce evidence to support his remarks.

The CML says it has “significant reservations” over Brown&#39s championing of

regulation which it believes will squeeze smaller brokers out of the

mortgage market. It says consumers will be left with less choice and

greater costs as lenders are forced to slash the number of intermediaries

through which they sell their products.

The FSA admits it has had strong objections from the industry over its

proposals but has cited the views of the consumer panel as the driving

force behind its decision to press ahead with the regulation.

Scottish Amicable national mortgage manager John Malone says: “I am very

disappointed. The influence the panel has had in the FSA&#39s thinking will

only serve to add to the paper chase already experienced in the market and

raise costs for lenders, intermediaries and consumers.”

DOCE:

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