Some packager categories facing regulation

Packagers will be regulated under forthcoming legislation &#45 but only some, says the Treasury in its newly published regulation for mortgage advice.

Despite widespread confusion about the regulatory status of packagers, the Treasury confirmed it does not plan to amend proposed legislation to take account of packager firms.

However, it says that certain packagers “may or would…carry on the regulated activity of arranging”, and “could therefore be subject to regulation”.

The Treasury has defined four categories of packager in an attempt to clarify the regulatory position.

The first category is mortgage clubs providing information services for intermediaries. The others are mortgage packing companies providing service to the benefit of lenders, broker packagers offering intermediaries a complete outsourcing service, and correspondent lenders providing front-end administration services for lender.

The Treasury says that mortgage clubs and mortgage packaging companies will fall outside regulation since they “would not carry on the regulated activity of arranging”.

But broker packagers and correspondent lenders are considered eligible for regulation.

The Treasury gives no guidance on where the boundaries between different packager categories lie.