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Mortgage brokers attack lenders

Independent, The (London), May 5, 2008 by James Daley Personal Finance Editor

Britain's mortgage brokers have launched a war against the nation's high-street banks, complaining to the Financial Services Authority and the Office of Fair Trading following recent attempts by lenders to reduce the amount of business coming to them through the intermediary market.

Sales of mortgages through brokers have soared in recent months as consumers have sought help to get the best deal due to the tough conditions in the market. Many of the best deals have only been available for a few hours before being pulled, and consumers have preferred having a specialist on their side to help them to get the lowest-cost loan.

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However, the increase in sales through intermediaries has seen lenders forced to pay more out in commission, as branch sales of mortgages, which deliver higher margins, have fallen away. As a result, many lenders have begun offering better deals in their branches, in an effort to tempt customers away from the brokers - creating a dual-priced market.

The Association of Mortgage Intermediaries has complained to the Financial Services Authority, claiming consumers are getting a worse deal because of the high-street lenders' actions. It is also believed to have brought the matter to the attention of the Office of Fair Trading, in the hope that they too may get involved in straightening out the market.

Chris Cummings, the director general of the Association of Mortgage Intermediaries, said: "Lenders have seen branch-based business really suffering. So in order to try and balance their business, instead of offering equal access to products across all channels, they've started introducing mortgages that are only available directly and not to intermediaries.

"Lenders are under pressure to rebuild their capital position, and as a result are trying to increase margins and drive more people through their branches. But we've taken this up with the FSA and have said it's consumers who are losing out on this."

However, the Council of Mortgage Lenders denied consumers were losing out, insisting their members were not doing anything wrong. Sue Anderson of the CML said: "I think this is just a side-effect of the market conditions at the moment. There's nothing wrong contractually with what lenders are doing. Dual pricing already exists in a lot of other financial product lines.

"Lenders have to do what is right for their business, right for their customers and, as long as it's transparent, which it is, then there's nothing wrong with it."

So far, the FSA appears to have been unmoved by the mortgage brokers' arguments, pointing out under its regulations lenders are not obliged to deal through brokers. It said in a statement: "If certain lenders decide to offer their direct customers cheaper deals, we do not see that customers' best interests would be served by preventing this."

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Mortgage brokers attack lenders

Independent, The (London), May 5, 2008 by James Daley Personal Finance Editor

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