“Know your broker” huge change for advisers By Sarah Davidson
Pressure on lenders to know their third party partners is pushing brokers out into the cold. March saw NatWest in- dulge in dual pricing caus- ing outrage among advisers while Woolwich had brokers sitting up till midnight try- ing and failing to book funds for clients. In early April Nationwide cut its proc fees on all prod- ucts by two bps to 0.33% for directly authorised advisers while Lloyds Banking Group made a variety of changes to proc fees across several brands affecting both DAs and appointed representa- tives.
Halifax cut gross proc fees on product transfers and further advances down to 0.31% up to 75% loan to val- ue; 0.2% between 75% and 85% LTV; and 0.1% on loans above 85% LTV. The move affects all DAs in the market across Legal & General mortgage club, PMS and Pink Home Loans. Experts warned that while scarce funding and higher capital requirements were
partially to blame for the moves, lenders were putting more stock in knowing their distributors. Robert Sinclair,
director
of Association of Mortgage Intermediaries, said: “I think this might be a reflection of the limited amount of busi- ness that comes from small- er DA firms. Most business is now routed through mort- gage clubs and networks. “However any significant reduction in income for bro- kers in difficult times must be a serious cause for con- cern. Lenders need to take care not to choke off distri- bution which might be re- quired in the not too distant future.”
“Networks and clubs have increasingly been asked to provide more compliance information on member firms”
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compliance information on member firms with Open- work’s mortgage director Paul Shearman revealing he had been asked to vet peo- ple in the business “involved with management informa- tion data at lenders” includ- ing any temporary staff. And Peter Brodnicki, chief
Know your broker The growing focus by lend- ers on “know your broker” is threatening the future of smaller brokers and could hit DAs disproportionately. Sinclair
said: “Last year
the Financial Services Au- thority kicked lenders all around the room on mort- gage fraud so now lenders are starting to take action on it. “That’s what is chang- ing the face of distribution. They’re
being told very
clearly to get to know who they are doing business with.”
networks
Since the start of the year and
clubs have
increasingly been asked to provide more detailed
executive of Mortgage Ad- vice Bureau, said: “The is- sues are no different, they’ve always been there but they are being scrutinised more, acted upon and implement- ed.” David Copland, chief ex-
ecutive of Pink Homeloans, said DAs were likely to suf- fer more than ARs. “It’s a lot more difficult
for the lenders to glean that information about DAs,” he added. “That’s part in par- cel about why we’re starting to see networks getting the better more exclusive prod- ucts. At the moment the mortgage clubs are looking at those and asking them- selves what they could do to satisfy what the lenders or the FSA. How are lend- ers going to find out about those 5000 or so DAs?”
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