Lenders could cut broker business by 60%

14 July 2010 | By Samuel Dale

The number of intermediaries used by lenders could drop by up to 60% after the Mortgage Market Review.

All but one lender surveyed in a Financial Services Authority commissioned report by Oxera says they will reduce the number of brokers they work with.

The average expected fall is 29% with a maximum reported reduction of 60%.

The Oxera report was commissioned to assess compliance costs and indirect costs of the MMR.

It says: “The relationships between lenders and intermediaries are likely to change as a result of the proposed rules by the FSA.”

It adds: “Although this would reduce to some extent the choice of consumers using an intermediary, each intermediary may still have access to a sufficient number of mortgage lenders—therefore, the reduction in the number of relationships between lenders and intermediaries may not affect the degree of competition between lenders.”

Robert Sinclair, director of the Association of Mortgage Intermediaries says: “There are extreme concerns that the FSA’s proposals will lead to a reduction in the availability of advice for consumers. Some are questioning where this leaves the broker and whether they will have a part to play.

“But brokers will always have a place because borrowers will always need to go to somebody to get advice and get a mortgage for the property they want. The mortgage broker is the one that holds the hand of the borrower through the process. Mortgage brokers are the ones that are keeping lenders competitive at the moment.”

Readers' comments (32)

Mr Pink | 14 Jul 2010 2:36 pm
As ever the FSA show a blatant disregard for brokers. They are a complete joke and the sooner they are dispanded the better for us all. They preach that clients need more independent advice, then put in measures that will ensure they receive advice on a smaller choice of provider. Only the FSA could do this.
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Anonymous | 14 Jul 2010 2:42 pm
'Great' news for all us brokers who are struggling to get deals placed with lenders who don't really want to lend.
This is the death toll for brokers now surely !
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Anonymous | 14 Jul 2010 2:46 pm
This is absolute rubbish where in this proposal is this treating customers fairly! No where that's where. How can it be good advice for a client not having access to the whole mortgage market through a mortgage advisor. This crazy not thought out idea of the FSA will cause more customers picking the wrong mortgage products and cant be sure if they have picked the best deal that suits them, this will lead to more complaints. I think the FSA should have a constrructive consultantion with mortgage brokers and not make decisions without some discussion. The breaking up of the FSA cant come quick enough.
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Tom | 14 Jul 2010 2:46 pm
Many lenders believe that in general, intermediary business is of poorer quality than direct business. How many of them have examinied the behaviour of their BDMs? In my experience it is quite common for BDMs to go through their online mortgage application system with intermediaries and show them how to answer certain questions to get a "Yes" from the system.
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phil h | 14 Jul 2010 2:49 pm
Mr Pink - unf. i think that the bigger picture is that the FSA have a blatant disregard for what is best for the consumer.. also once 'disbanded' we will simply have FSA2 or whatever name is chosen for the essentially the same people making the same humungous and seemingly irreproachable mistakes.
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Phil H | 14 Jul 2010 2:52 pm
whilst intermediary business must be the logical lower-cost distribution channel for pure mortgages, the problem is for the lenders that they don't get to sell their own badly conceived, expensive insurances!!
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Corporal Jones | 14 Jul 2010 2:53 pm
Don't panic!! The FSA is looking to weed out the bad apples & those of us who do a good job will have to be more robust. History teaches us "Only the wisest and stupidest of men never change." -- Confucius
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Anonymous | 14 Jul 2010 3:02 pm
WHATTTTTTTTTTTTTTTTTTTTTTTTT!!!!!!!!!

Sooner the FSA goes the better.
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Anonymous | 14 Jul 2010 3:03 pm
I was chatting to people in the regulation and discipline sectors of Law its quite obvious they go for brokers because they are a much easier target then the banks. Banks hide behind regulatory spread sheets and certian social circles they are in!.. So having large organisations being proved guilty is of course very diffiuclt because of stats banks produce which conforms to FSA standards so no chance of catching them out in regulatory terms. Yes we all know we are being used as fall guys but the FSA has to justify its offering some how as we all know just get used to .... We are the scapegoats for the entire mortgage market.
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Anonymous | 14 Jul 2010 3:04 pm
What will the FSA do when they have eventually crippled brokers and IFAs? Who can they hit with the big stick then? Suppose the only bonus is that some of them will be on the dole along with all of us!!
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