Mortgage lenders are no more likely to mis-sell to consumers than brokers, FSA chief executive Hector Sants says.
In response to IFAonline’s open letter to the FSA calling for change on dual-pricing, Sants says the regulator does not have “any compelling evidence” to suggest consumers are more likely to be mis-sold a product by going direct to a lender.
His comments are likely to infuriate brokers, who have inundated IFAonline in recent weeks with concerns about the possible negative effects direct sales could have on consumers.
Elsewhere in his response, Sants suggests the FSA will not change its tack on the issue of dual-pricing, meaning it will not ban the practice nor will it compel lenders to provide information to mortgage intermediaries.
The issue has caused considerable concern among mortgage brokers, who have suggested lenders are attempting to ditch the intermediary channel.
In our letter, IFAonline suggested unscrupulous mortgage brokers might not make consumers fully aware of the fact that better deals are available elsewhere, at the expense of honest brokerage firms.
However, Sants points out that the FSA has made it clear to firms that they must inform customers of the limits to their service and says the FSA will be enforcing this.
Sants has also dismissed claims that consumers are not as well served by visiting a lender directly, despite many intermediaries suggesting that consumers are unaware of the inferior service they will receive.
Indeed, the Association of Mortgage Intermediaries (AMI) recently pointed to research suggesting the majority of consumers who speak to bank sales staff feel they have received advice, even though, as far as the Ombudsman is concerned, they have not.
But Sants says the FSA has not found “any compelling evidence” of this, adding a lender “will need to disclose the level of service it is offering, in exactly the same way that a mortgage intermediary does”.
Sants also reiterated the FSA’s stance that lenders’ decisions not to offer intermediary ranges is a “commercial decision”. “I do not believe there is anything further we can add on this particular point,” he concludes.
The response suggests it is unlikely the FSA will act on the current issues facing dual-pricing in the mortgage market, and it now rests on lenders to realise the value intermediaries offer to their businesses.
To read the full response from Hector Sants, click here.
Contact John Bakie on 020 7484 9805IFAonline
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