FSA questions lender dual pricing where broker deals are poor value
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Lesley Titcomb, director of small firms at the Financial Services Authority, says it is beginning to question why some banks are dual pricing.
Speaking to a packed auditorium at the Mortgage Business Expo, Titcomb told brokers: “Lenders are not obliged to lend through intermediaries and how they choose to price and distribute their products is up to them.
“However, we do expect them to be sensible and act with integrity. Where an intermediary product is of such poor value compared with the direct product from the same lender we have to question why lenders would continue to market that deal.”
She also pledged to crack down on large broker commissions and revealed that the regulator is looking to ban the practice of brokers rolling up their fees into the terms of loans.
Titcomb says: “We are looking at whether we should ban the practice of lender charges and brokers’ fees being rolled up into loans, then paid by customers as part of their regular mortgage payments.
“Doing this could help focus customers’ attention on what they are actually paying.”
She also claimed that the FSA’s proposals on self-cert would not block access to the market for the self-employed and argued that an irregular income does not mean one that cannot be verified.
She says: “Does anyone really believe that we want to stop self-employed people - that’s over three million people - from ever getting a mortgage? And do we really want to make all lenders ask their custo-mers how much they spend on cigarettes and alcohol? Of course, the answer is no but you could be fooled into believing otherwise by some of the comments we’ve seen so far.”
But Alex Milne, a sole broker with Mortgageforce, says: “Far be it from me to point the finger but the regulator should not be simply asking questions about dual pricing, it should be taking robust action to eradicate the practice in the name of its Treating Customers Fairly initiative.
“It seems bizarre that lenders would not want to offer their best products to brokers who are best placed to provide a complete service to clients. And when belt-tightening is the order of the day, using brokers can cut lenders’ overheads.”
Another broker, who wishes to remain anonymous, says: “Make no mistake, the regulator is actively pursuing a policy of wiping out whole-of-market brokers.
“It will not be satisfied until there are no such intermediaries left in the market.”
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