Nationwide Building Society has been criticised for offering Catmarked mortgages which IFAs claim do not comply with the Government's standards.
The UK's biggest building society is accused of exploiting a technical loophole which allows it to market discount mortgages as Catmarked while charging borrowers redemption penalties.
Under the Cat-standard rules, discount-rate mortgages are banned from charging exit fees.
The controversy surrounds Nationwide's budget option loans, which provide borrowers with a discounted mortgage rate for the first two years.
IFAs say Nationwide's small print shows the budget options are capped-rate mortgages with an uncompetitively high rate of 9.99 per cent, a hidden price ceiling “highly unlikely” to be reached.
This allows Nationwide to load redemption penalties on the first five years of the mortgage without borrowers realising they will be charged for redeeming the loan early.
IFAs claim this makes a mockery of Cat standards and exploits consumer trust in the requirements. They say the move contradicts Nationwide's policy of fairness for borrowers and sets back the mortgage industry's efforts to promote transparency in products.
Charcol senior technical manager Ray Boulger says: “Nationwide has driven a coach and horses through Cat standards and has shown everyone else a way through them as well.”
Sedgwick Independent Financial Consultants consultant Steve Smith says: “I am unhappy that a major lender feels it can bring out a Catmarked product which is clearly against the spirit of the standards and the mortgage code. It should not be allowed to sell these products as Catmarked.”
A Nationwide spokesman says: “The loans are not being marketed as capped because the reason borrowers will choose them is because they want to pay lower rates at first.”
Aberdeen Asset Management continued on the acquisition trail this week as it snapped up Swedish property manager Celexa for £16.5m.
Celexa, which manages property in Sweden, Holland and the UK, has assets of £1.9bn. It will increase Aberdeen's property assets under management by 83 per cent to £4.2bn from £2.3bn.
Aberdeen will pay Stock-holm-based Swedish life insurer Alecta £15.1m in Aberdeen shares and the remaining £1.4m in cash.
Aberdeen Property Investors chief executive Ian Reid says: “Celexa provides us with an excellent international platform to exploit our expertise in the emerging European property asset management market.”