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Correspondent lending written into regulatory plan

Correspondent lending will be regulated after N3, writes Harriet Williams.

Classing correspondent lenders as a type of packager, the Treasury said their business would fall under the regulated activity of “arranging”.

Nigel Gardner, operations director of Genesis Home Loans, says: “I don&#39t think this announcement will surprise anyone and anyone who thought any part of the mortgage process would be left unregulated is a little naïve. Now it&#39s just a question of how the FSA will actually build the detail of regulation.”

Gardner expects the reality of regulation to put some would-be correspondent lenders off and expects regulation to send more entrants down the dual-branded route.

Julian Wells, head of marketing at Mortgages PLC, says: “You&#39ve got to expect to be regulated as a correspondent lender because you lend in your own name. It is an obvious barrier to entering the market as a correspondent lender, but one that must be overcome.”

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