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Over 600 mortgage broker firms kicked off lender panels since 2010

Lenders have kicked at least 676 mortgage broker firms off their panels over the past four years.

According to FCA data obtained by Money Marketing sister publication Mortgage Strategy, lenders removed 297 directly authorised and 379 appointed representative firms from their panels between April 2010 and January 2014.

The figures come from the regulator’s Information from Lenders system, which invites lenders to share information about brokers where they think a broker or a firm may have been involved in financial crime or poor practice.

The scheme is voluntary so the number of brokers removed from panels could be much higher. Some lenders choose to report the individual brokers they have kicked off as well as firms. 

Association of Mortgage Intermediaries chief executive Robert Sinclair says: “These are significant numbers which shows that lenders are taking seriously their responsibilities in terms of limiting fraud and poor broker behaviour.

“The bulk of the numbers may have been in 2010 and 2011 as we are not aware that the numbers of panel removals have been significant over the past 12 months.”

Mortgage Strategy has seen letters where major lenders have refused to give the broker removed from a panel a reason for their exclusion or a chance to appeal the decision. 

London & Country associate director of communications David Hollingworth says: “Lenders have been hot on monitoring for fraud, and rightly so.

“But what you don’t want is individuals or firms adversely affected when they have made a straightforward error rather than a premeditated attempt at fraud.”

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Comments

There are 16 comments at the moment, we would love to hear your opinion too.

  1. Alan Lakey should start a class action.

  2. @ Paul 3 quick questions…

    1) When lenders report this data, is it cross referenced – for example, have 30 lenders booted off the same broker or is it individual firms.
    2) Has this information been passed to the regulator so that this is brought to their attention? if not why not?
    3) What are the typical reasons? fraud (by broker or client) or simply having a row about how rubbish the lender is? (as implied by Black Dog).

    Whilst we are on… how many firms actually are mortgage brokers, and therefore is 676 a significant proportion?

  3. If this is down to financial crime e.g. mortgage brokers deliberately manipulating data to obtain a mortgage on behalf of a client then this action should be welcomed by the profession as these individuals have no place in the industry.

    However, if these individuals had been kicked off lender panels for holding a lender to account over shabby customer service or in some cases for low business submissions then the regulator needs to take action against those organisations the clear breaches of FCA rules. Last time I checked lenders have a duty to treat customers fairly and that includes brokers.

    I don’t do much mortgage business but I did receive a letter from one major lender recently stating that my agency was been removed due to low levels of business.

    Surely this is a form of attempted market manipulation!

    Interesting to note that platform providers in the investment arena try the same trick.

  4. Comment testing Centaur

  5. Centaur comment test 2

  6. Hi Dominic,

    I hope this helps:

    1) Some of these firms will have been removed by multiple lenders but they are only counted once. Eg: So if five lenders remove Broker A, they are only counted once in this data set.
    2) The figure is from the regulator, through a voluntary scheme called Information from Lenders. Lenders have reported these firms to the FCA, although they are not obliged to, so the number could actually be a lot higher.
    3) The FCA told me that fraud was the reason in the vast majority of cases, although it could not say whether it was the broker or borrower under suspicion. In some cases there may be other reasons for removal – eg: consistently poor quality submissions.
    As for the number of brokerages, at the end of 2012 (the last time this data was collected) there were 5,055 DA firms and 2,434 AR firms with mortgage permissions and the general consensus is that there are roughly 10,000 active brokers in the market.

    However, some of these 7,500 firms with mortgage permissions will write very little mortgage business but they hold the relevant permissions.

    Hopefully that clears things up. If not, please feel free to get in touch again.

    Paul

  7. I agree with everyone that this is welcome news in terms of actual fraud by brokers, the missing piece of information for me here is how many in branch advisors/managers have banks terminated employment and removed from the FCA listings for the same reasons?
    If this type of information is being published at least balance it to show what the market is seeing as whole and not just focus on brokers, again. I am certain that mortgage fraud etc is not purely the domain of the broker – HSBC seem to have been hit with similar fraud issues and yet they do not have a broker introduction offering.

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