Brokers set sights on unregulated products

One in ten mortgage brokers intend to avoid the new FSA regime by concentrating on unregulated products.

Research from the Barrowstead Consultancy reveals 8% of intermediaries expect to leave regulated business behind to avoid the costs and pressures of statutory regulation.

In its proposed form, the FSA regime excludes buy-to-let, second charge and home reversion schemes. And Barrowstead says these findings put pressure on the government to extend the scope of regulation.

Colin Preston, managing director of Barrowstead, says: “This vindicates concerns regarding the scope of regulation and is something that should be of concern to adverse lenders in the market. Any broker doing a good job has nothing to fear from regulation.”

Richard Hurst, communications manager at Future Mortgages, says that lenders&#39 own measures will be sufficient to protect customers taking unregulated products and adds: “These areas are still covered strongly from the lender&#39s point of view in terms of affordability and suitability, so there is no detriment to the client.”

But Nick Pearson, national money advice co-ordinator of the Federation of Information and Advice Centres, says: “There are some unscrupulous firms in that line of work, and it is madness there is a regulatory black hole for second charge.”

The survey also finds that a further 3% of brokers plan to exit the mortgage industry altogether rather than meet the MCCB&#39s December 31 deadline.