View more on these topics

FSA warning on inducement payments

The letter, issued last week and copied to mortgage industry trade bodies, could see an end to practices such as lenders being forced to pay to be on network panels.

It states: “We have been told that in some instances product providers and intermediaries may be contemplating significant upfront payments (in some cases upwards of £1m) as a condition for the provider&#39s products being placed on, or even considered for, the intermediary&#39s panel… Such payments would not be consistent with the standard of conduct for firms – irrespective of whether they will be whole of market or multi-tied.”

Large networks with bargaining power, like Sesame, have been asking lenders for money, describing this as a marketing fee. Sesame denies it is an inducement. Commercial director Martin Davis says: “None of our panels are ever chosen on what lenders pay. We use the money to commit to resources like training and we make this very clear.”

One industry source suggests the letter could have implications for lenders looking to secure distribution.

He says: “If I were a lender that had acquired a packaging company or network, or had invested heavily in the compliance function of either, I would be keeping a close eye on the level of business coming from that operation. In some cases I would ask whether my products should be on the panel. Are they there because they deserve to be or merely because I own the facility?” But one lender, who asked for anonymity, adds: “The regulatory regime requires intermediaries to justify the selection of a product provider based on each individual&#39s circumstances. An intermediary can hardly justify a recommendation on the grounds of a previously paid inducement so I don&#39t know why anyone would pay such an inducement.”

Freedom group compliance director Stephen Atkins warns lenders are likely to consult and formulate a uniform response which could put some networks in a difficult position.


TEPs can help the property ladder climb, says Policy Portfolio

With parents expecting to give their children almost £24,000 to help them get a foothold on the property ladder, traded endowment policy specialist Policy Portfolio is suggesting that parents consider investing in TEPs to be assured of a guaranteed minimum sum to assist their offspring. Brian Goldstein, managing director of Policy Portfolio, says: “With the […]

B&B to slash 450 more jobs

In its pre-close trading statement issued on Friday B&B, which is trying to sell non-core businesses including Charcol, says from its 3,950 employees, 150 have already been removed while 450 will be slashed between now and the end of next year. These will come from middle management, back office and support functions rather than customer-facing […]

Is Gummer the right man to chair AMI?

As well as his main role as Conservative MP for Suffolk Coastal, Gummer is chairman of the Association of IFAs, AMI&#39s sister trade body. With the market in a state of flux, the AMI board chose an impartial chairman who wasn&#39t from a network or a directly authorised firm. So, Mortgage Strategy asks: Do you […]

Housing boom may be coming to an end, say lenders

The housing boom may be set to end, according to press speculation this weekend. Nationwide is to publish their housing figures for June today and comments made by those who compile the index suggest recent monthly house price increases are not being sustained. A period of stagnation is forecast as opposed to the crash some […]


News and expert analysis straight to your inbox

Sign up