Vic Jannels, chairman of the Professional Mortgage Packagers Alliance is appealing to lenders to call a halt to what he sees as two potentially unfair practices that have arisen during the current credit difficulties.
He sees these as withdrawing products with little or no notice, and reducing payments for packagers while maintaining payment levels for brokers.
Jannels says: “All lenders are bound by Treating Customers Fairly and are expected to deliver the FSA’s TCF outcomes – especially number three that says customers must be provided with clear information and be kept informed before during and after the point of sale.
“PMPA members have reported, for example having been emailed at 7.00 am one morning last week to be told that a product range for which they were actively packaging DIP’d cases had been pulled at midnight the night before. This sort of practice is not only unfair to customers, it is also unfair to packagers and brokers who need adequate notice of withdrawals and enough time to complete pipeline cases.
Jannels says that some lenders are also cutting administration fees paid to packagers, one by as much as 90 basis points.”
He adds: “While maintaining in full the procuration fee paid to brokers. We all appreciate that times are tough, but do some lenders have a hidden agenda to drive a proportion of the packaging sector out of business? If so, this is very short sighted because packagers will always be an important distribution channel. The longer sighted lenders, who are already forming strong relationships with packagers in readiness for the market returning, already recognise this. One lender, TMB, is a shining example of best practice in this area, as it has reduced fees fairly across both packagers and brokers.
“In order to achieve TCF, surely fair treatment should apply across the whole market, not just in the lender/ borrower relationship? So, as an organisation that represents a substantial proportion of the packager market, PMPA is asking lenders to think about returning to the practice of giving fair warning on product withdrawals and to be more even-handed when it comes to reducing fees.”