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Packagers query Treasury&#39s proposals

Treasury plans to regulate some packagers but exclude others have been met with disbelief.

The Treasury confirmed it will not amend proposed legislation to take account of packagers. But it does identify four types of packager in a bid to clear up widespread confusion over their regulatory status. Mortgage clubs and mortgage packaging companies providing lenders with administrative support will not be regulated.

But the Treasury says that broker packagers – defined as those offering outsourcing services to intermediaries – and correspondent lenders “may or would…carry on the regulated activity of arranging” and “could, therefore, be subject to regulation”.

Industry reaction varies from firms who think all packagers should play by the same rules to those who think it will prove impossible to categorise packagers in practice.

Packagers say a two-speed system will be “difficult to police” and could be a drain on industry resources.

Roger Morris, managing director of EM Financial, says: “I think if packagers are going to be regulated they all should be and I don&#39t see how you differentiate between one type and another.”

Packagers with different business arms are certain the FSA will force regulation upon all their activities.

Ray Bohringer, managing partner of ICMG, says: “I just know the FSA will say any packager with direct affiliation to a sales force has to be registered, which may put us at a disadvantage in other business areas to non-regulated packagers.”

Julian Wells, head of marketing at Mortgages PLC, says: “It is looking through rose-tinted spectacles. In reality borrowers take advice from brokers, who take a packager&#39s advice on the best product.

“There is a really blurred line between information and advice, and the FSA will have to create an audit trail to make sure this works.”

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