On the one hand, lenders claim to be reliant on intermediaries for an increasing share of their gross lending figures while many intermediaries of all colours complain bitterly about dual channel lenders offering better products through their direct or branch distrib-ution. Well, let me tell you now that this battle has only just begun.Post-regulation, we live in an open world where we can simply run a KFI on one of our competitors to determine the truth of the remuneration they overtly receive. Of course, even this is a fraud since any of the networks and clubs receive “marketing contributions” which are not disclosable and buy the lender places on their panel. A number of lenders are, how-ever, seeking to differentiate their procur-ation fees around product profitability. Simply put, the less profitable the product is to the lender, the less he will pay the intermediary for introducing it. This makes fine commercial sense from a len-der’s perspective but it places the interm-ediary in an impossible dilemma. If he recommends the best product, he gets paid less for doing so by its distributor. While this will overtly affect no-fee and low-fee brokers, ultimately, even the full-fee broker will feel the pain as the increasing customer resistance to high fees becomes evident. In a literal sense, an intermediary who treats TCF literally will be severely disadvantaged. This seems to me a nettle that the FSA should grasp and quickly if they are really going to fulfil their responsibilities to the consumer. Why am I so concerned about this issue? It is primarily because a number of the major UK brokerages and networks do not offer genuine best advice. Everybody’s model needs, as I have frequently stated before, to be driven by profitability but where super profits are generated by selecting lenders which allow you to package rather than not package and you still claim independence is a fundamental flaw which the FSA has failed to address. Remuneration is still driving the major-ity of mortgage distribution channels’ advisory process and, if lenders change their remuneration practices in the manner that they are proposing, the only loser will be the customer. And, why as intermediaries, should we worry about all this? Because, in a few years’ time, given their track record, the regulators will look back and say “Sorry, boys, we forgot to shut the stable door when it was open but, since you ran through it, we reserve the right to shut it retrospectively.” Mark Chilton is chief executive of Purely Mortgages
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