Brokers angry over lack of deals from lenders
August 5, 2008
Many consumers as well as many different industries have been affected by the global credit crunch, which made its way to the UK last summer. Credit conditions have become far tighter, consumers have struggled to get finance, lenders have struggled to fund their mortgage lending operations, and the wheels of the mortgage lending industry have come close to grinding to a halt. Recently a number of lenders have tried a new tactic, by offering better deals to consumers that go to them directly rather than going through a middle man in the form of a broker.
However, this, and the fact that some lenders are excluding brokers from a number of mortgage deals altogether, has angered many brokers, who say that it is unfair for them to be left out in the cold. Official from the Financial Services Authority, however, recently said: “It is a commercial decision for a lender whether they want to offer products directly to the public or via a broker. Anyone dealing with consumers should ensure that consumers are treated fairly.”
In fact, the FSA has said that mortgage brokers need to be ensuring that customers get the best deal on a mortgage, and this means that if the lender knows that a particular deal is available at a better price direct through the lender then he or she should tell the consumer so.
The FSA went on to state: “For example, if a customer goes to a whole of market intermediary, and the intermediary recognises that, in current market conditions, there may be more competitive products in the market other than those available to the intermediary, that may be of interest to the customer, we think that there must be acknowledgement of this.”
Another industry official recently stated: “With continuing uncertainty in the mortgage market and the total number of products continuing to decline, many more people will be considering approaching an intermediary to find them the best mortgage deal for their circumstances. However, many intermediaries are finding that their choice of products to recommend to clients has been increasingly restricted as more lenders move to offer their most competitive products just for direct only business.”
He continued: “Just 49% of deals on the market today are exclusive to intermediaries, whilst 23% are available through both intermediaries and direct business. Although intermediaries have 72% of the market to advise on, it’s the deals that are available direct from lenders which are the most competitive. The top 13 deals for a two-year fixed rate mortgage are only available direct, and of the top 20 deals only three are available via intermediaries.
“This reduction in competitive deals has led Jonathan Fischel, head of mortgages and credit unions department at the Financial Services Authority to advise intermediaries to advise on direct only products, and charge a fee for the advice given.”
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