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Intermediaries question the benefit of regulation

As many as 60% of intermediaries have seen their costs increase by more than 10% due to mortgage regulation, research by the Intermediary Mortgage Lenders Association reveals.

The research among the intermediaries that provide IMLA members with most of their mortgage business also found that 72% of intermediaries felt that mortgage regulation had brought no benefit to their customers.

These findings support IMLA’s earlier research, which showed that mortgage regulation can’t be justified on a cost benefit basis.

The intermediary research also highlighted that 60% of mortgage customers only obtain one or two KFI’s, with the average for all customers of 2.3.

Additionally, over 40% of intermediaries believed their clients did not read the KFI properly, and 60% believed their client didn’t understand the various components of the KFI.

Nearly 70% of brokers believed their client didn’t use the KFI to compare products, and 68% didn’t believe that their client got better advice as a result of mortgage regulation.

One final area that the research highlighted was the attitude of intermediaries to packaging, an area where some confusion still exists. The majority, 67%, believe that all packagers should be regulated.

Tim Dawson, chairman of IMLA, says: “It is becoming clear that despite the enormous time and cost incurred by lenders, intermediaries and customers, regulation has not achieved its main objectives.

“The research also found that the majority of intermediaries would like to see regulation simplified, with less paperwork involved. MCOB currently runs to 483 pages, so we see this as being quite a challenge.

“We believe that the FSA should take the opportunity in 2006 to work closely with the industry’s professional bodies, to review how the current regulatory framework can be simplified to deliver real benefits to the consumer in a cost effective way.”


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