Packagers fear FSA scrutiny could prompt cuts

Fears have arisen that the Financial Services Authority could start to look more closely at lenders’ distribution models, which could force some to reduce their panels.

John Rice, managing director of the Regulatory Alliance of Mortgage Packagers, says: “I believe the FSA will start to look more closely at lenders’ distribution and monitor how closely lenders are working with them. If a lender deals with 100 packagers and only has 30 business development managers, they can’t possibly get close to them all and monitor them, they simply don’t have the resources.

“A lender will either have to increase resources, which a lender is not going to do in this climate, or redefine their distribution. The packagers that aren’t supplying good quality will get knocked off. I think the FSA are talking about it internally and I believe it is pretty much ready to go with it, I don’t know how or if it will engage lenders in that, but I believe it is certainly on its agenda.”

Terry Pritchard, director of packaging at Edeus says its relationship with packagers is still strong and will continue to be so.

He says: “We take business from packagers in the same sense that we would have done in the past, we have managed our business volumes. We still have a panel of over 100, but 17 premier partners, we haven’t increased or decreased this in any shape or form, it’s not worth it, it’s not worth making changes until you know what the market’s long-term whole strategy is going forward.”

A spokesman for the FSA however says that it has no such plans for a crackdown.

He says: “We are doing some work into responsible lending, but we do not determine lenders’ panels.”