Hector Sants has confirmed that the FSA's definition of ‘whole of market' takes into account the fact that many mortgage deals are not offered through intermediaries.
Sants also dismissed rumours that the regulator was to impose new minimum liquidity requirements on building societies.
The comments by Sants are the first time a major FSA figure has directly addressed the issue of dual pricing in the mortgage market.
Commenting on brokers’ concerns about cheap direct deals, Sants says: “We have been approached by a number of intermediaries asking whether this practice is fair under TCF. Our response is that lenders are not obliged to deal through brokers. How they choose to price and distribute their products is a commercial matter.”
“It follows from this that not every product on the market will necessarily be available to any one broker – something which our definition of whole of market takes into account. 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.”
However, Sants also says he hopes current market conditions do not make it harder or more expensive for customers to access mortgage advice.
Recent developments mean many of the best mortgage deals are only available directly from banks and building societies and some brokers have complained that customers are often missing out on advice when taking a mortgage because cheaper deals are available in branches.
Sants was quick to dismiss recent rumours that building societies would need higher levels of minimum liquidity, which would effectively reduce mortgage lending capacity by several billion pounds.
“As a principles-based regulator, the key underlying principle has always been that societies need to meet our threshold conditions by having a credible and sustainable funding model,” he says.
“As set out in our existing guidance, a society needs ‘to ensure that it can meet its obligations as they fall due, a society should … keep an appropriate amount and mix of liquidity to meet any sudden adverse cash flow; the level of liquidity held should be sufficient to maintain public confidence that the society can meet its commitments.’ This has not changed, although there are no doubt some lessons to be learned for the future.”
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