Threat to small firms by MMR is unfounded

john malone
John Malone: Elimination is unlikely

The Mortgage Market Review will not inadvertently kill off smaller directly authorised firms, says John Malone, executive chairman of PMS.

Last week Mortgage Strategy reported that a major lender was looking to pay proc fees based on brokers’ quality of business, not quantity. It is believed to be making the changes because of the forthcoming MMR.

Malone says: “There have been suggestions from some commentators that on the back of the MMR and the Financial Services Authority’s Mortgage Thematic Review, the only peoplewho will survive are the large firms, with smaller DA firms being shoehorned into a network or forced out of the market.

“I, for one, do not believe that is the regulator’s intention. I have not seen or read anything to suggest that this new element of regulation is designed to eliminate the small intermediary.”

He adds: “If we wipe out thousands of intermediaries who will look after their existing business and clients?”

But Jonathan Burridge, adviser at Burridge.eu, disagrees.

He says: “While the regulator has not stated outright that it wants to end smaller businesses, the burden of compliance bears far heavier on them to the point that I cannot see how it is economical for a one-man band to be DA.”

Burridge says it will be hard for smaller brokers to prove the quality of their business because they will not submit as much as larger firms.