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MCCB protection warning if broker fee limit is axed

The Mortgage Code Compliance Board believes consumer protection will be red-uced if the £5 broker&#39s fee maximum limit for advice not resulting in a mortgage sale is removed.

In its consultation paper, the Treasury justifies removing the limit because the best advice for a potential borrower might be to not take out a mortgage.

But the MCCB says: “The result would seem to be that protection offered to consumers under the FSA regime will be less than that offered to other borrowers.” For example, people with loans regulated by the Consumer Credit Act.

Without the maximum limit, the MCCB fears that consumers could be hit with fees running into hundreds of pounds, even though no loan is arranged.

It says its biggest number of consumer complaints come from non-refund of brokers&#39 fees and is a significant area of non-compliance. Of the 261 complaints received by the MCCB in the past six months, 67 related to this issue.

Because the Financial Ser-vices and Markets Act imposes criminal sanctions on unauthorised people under-taking regulated activities, the MCCB says it is “imperative that the activities of entering into, administering, arranging and advising on a regulated mortgage contract” are clearly defined.

It is also concerned that market competition will be restricted if the clause stating that an “appointed representative may not be an authorised person for any other regulated activity” is not reconsidered as many MCCB-registered intermediaries are tied to insurance or investment firms.


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