There have been renewed calls for the regulator to boost its supervision of networks after it was revealed that consumers but not brokers will be compensated for losses incurred due to Network Data’s closure.
The Financial Services Compensation Scheme announced last week that it is stepping in to protect individuals who may have lost money as a result of dealing with five mortgage firms including failed network Network Data.
Consumers can now claim compensation if they have lost money as a result of dealing with the five companies the FSCS has declared to be in default.
The firms are PMSG Insurance Services – also trading as Profess-ional Mortgages Services Group – Financial Quest UK, Finance Direct (UK), First Class Mortgages and Network Data Limited.
The FSCS says some smaller businesses are also covered but only for deposit and investment claims.
Network Data went into administration in 2009 owing its appointed representatives more than £2m.
Andy Valvona, relationship manager at Capita Financial Software, says: “Why did the Financial Services Authority not act when it was obvious to many that Network Data was experiencing difficulties?
“The FSA has statutory objec-tives in four areas, the second of which states that it must ’protect consumers by ensuring that firms are competent and financially sound’. The overwhelming feeling in the industry is that the FSA will have to re-examine its approach to this objective in light of recent network failures.”
Tony Lilley, director at Mortgage Link, says: “As ever, there is no help for the brokers who lost significantly more than any consumer. When will there be an inquiry into how the FSA dealt with the collapse of Network Data?”
The FSA says it is unable to comment on individual cases.