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Say goodbye to golden hellos

As we reveal on page 4, in a strongly worded letter to the financial community, Oliver Page and David Strachan, directors of FSA&#39s retail division, say they consider such payments would “be incompatible with the fundamental principle that a firm must not conduct business under arrangements that might give rise to a conflict with its duty to customers”.

They go on to point out that financial support for intermediaries should either be in commission that is disclosed to the consumer or a permissible form of indirect benefit.

The letter seems to be specifically aimed at larger networks that are holding lenders and providers to ransom for large upfront payments to be considered for restricted panels.

Why the FSA is so concerned is that these panels could result in the consumer having to pay higher monthly payments to clients to support the higher commissions that will be paid.

The FSA is clearly worried and rightly so. Monies paid out will have to be recouped from somewhere and that&#39s likely to be in higher interest rates and higher monthly repayments.

Indeed, one of the flaws in the new rules is that if a broker multi-ties to four life companies then he only has to tell the customer that he represents these four companies and does not have to disclose that the premiums being offered are all loaded by 20% to increase broker commission.

The contents of the letter have far-reaching consequences and over the coming weeks Mortgage Strategy will be looking at those in even more detail. Time will tell whether the warning letter will have any implications for branded lending operations or for those lenders that see investing in their intermediaries compliance function as a means of securing business. Watch this space.


57% increase in complaints received by FOS

The FOS annual review shows that 97,901 new cases were dealt with during the year to March 31, 76,704 of which were resolved. Of the cases received, 51,917 related to endowment policies linked to mortgages – a staggering increase from 13,570 the previous year. Complaints specifically concerned with mortgage loans fell from 9,438 in 2003 […]

More families moving to France but working in Britain, says Conti

There is a increasing trend towards families buying together in France but living apart during the week, says overseas mortgage specialist Conti Financial Services. Conti&#39s regional manager for France Ben Maher says: “We are seeing more couples with children making the lifestyle change to move to France in order to clear debts and start a […]

AMI pleased as FSA starts sending MTA letters to networks

The Association of Mortgage Intermediaries annouced this week that it is pleased to note that the FSA has started the process of issuing minded to authorise letters to networks. Chris Cummings, AMI director, says: “The lead-up to regulation has created uncertainty in the market. One of the key questions facing any mortgage intermediary who has […]

LMS plans to get closer to brokers

It has appointed Deryck Highet, who has joined from Bradford & Bingley where he worked for the past 24 years in a number of positions, to the newly-created role. He will be responsible for a team of 11 account managers and for developing the transactional and remortgaging business. LMS has a national network of solicitors […]

Europe: why persist with value today?

By Rob Burnett, Neptune’s Head of European Equities The Neptune European Opportunities Fund remains committed to a value bias. We see a broadening array of opportunities in diversified industries at compelling valuations today. The most complicated part of the market is the European banks. We are currently overweight in this sub-sector as many banks are […]


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