View more on these topics

MCCB bids to close broker fee loophole

Many mortgage brokers are resorting to underhand tactics in a bid to dodge Consumer Credit Act rules which force them to refund fees, says the Mortgage Code Compliance Board.

The MCCB says it has found a number of mortgage intermediaries flouting CCA legislation by issuing borrowers with unofficial documentation which states that fees will not be refunded if the mortgage fails to complete.

It has also found brokers establishing in-house packaging firms in an attempt to avoid refunding borrowers as the regulations allow fees to be kept if a third party was involved in the mortgage application.

The MCCB is determined to stamp out the practices after revealing that almost 40 per cent of the borrower complaints it received last year concerned the failure of brokers to refund fees after a mortgage fell through.

Under CCA rules, being reviewed by the DTI, brokers are only entitled to charge a maximum of £5 to clients for every mortgage that does not complete within six months.

The MCCB says this may be a factor in motivating brokers to find ways to avoid refunding fees, which they believe should be paid whether a mortgage application is accepted by a lender or not.

Head of communications Brad Baker says: “Brokers should follow the guidelines if the mortgage does not complete and refund their fee to the borrower. They should not be hiding behind other documentation or small print to try to avoid having to comply with very clear legislation.”

Charcol senior technical manager Ray Boulger says: “Although the £5 maximum is certainly out of date, it is absolutely right the MCCB should crack down on these brokers who abuse the rules.”

Recommended

Investors turn to VCTs

The early stage venture capital market is thriving with investment from high-net-worth clients, according to a new report from VentureQuest.The 272-page report published last week reveals that many high-net-worth individuals have been turning to the venture capital sector to seek better returns at a time when conventional equity markets have been relatively stagnant.Investment in third-generation […]

IFA suspended over watchdog award

The PIA has suspended the investment business of IFA Complete Financial Services of Hillside, Bishops Walk, Shirley Hills, Croydon because it has failed to comply with an award made against it by the ombudsman.The award was made in August and the firm is contesting the decision and has failed to offer redress to the complainant. […]

Hargreaves tells investors to sell after US terror attacks

Hargreaves Lansdown is advising investors to increase liquidity in their portfolios following the attacks on the US last week.In a letter to clients, chief executive Peter Hargreaves predicts that a US recession is now almost certain, and advises clients to sell off poor performing investments to protect against any further market falls.Hargreaves says: “Today, I […]

&#39Govt figures back geographic rates&#39

Government statistics back enhanced annuity rates on a geographic basis, according to MGM Assurance.Research from the Office for National Statistics charts disease patterns in regions of the UK and it shows higher levels of heart disease in South Wales, Scotland, Tyneside and Northern Ireland.MGM says measures need to be taken to ensure consumers do not […]

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

    Leave a comment

    Close

    Why register with Money Marketing ?

    Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm

    Email: customerservices@moneymarketing.com