At a recent Council of Mortgage Lenders (CML) seminar, Stephen Knight, chairman of GMAC RFC, called for packagers to rename themselves in order to clarify whether or not they should be regulated, writes Paul Robertson.
Knight said brokers should call themselves credit brokers or outsourcers, depending on whether they are registered with the Mortgage Code Compliance board (MCCB).
Knight said: ‘If they are registered with the MCCB, by definition they must be brokers, in which case they should be registered. Packagers who are acting and providing services to lenders ‘ who do not advise or see the public ‘ should call themselves outsourcers. The term packager does not mean anything whereas the other terms describe the two different types of organisation that currently come under the umbrella description.’
He continued: ‘The question is ‘are they a broker? Do they see the public and advise the public?’ If they are not, what would they have an MCCB number for? There is no need for a company that provides services to lenders entering the chain after advice is complete, to be registered with the MCCB or regulated.’
Knight also noted regulated packagers would have to disclose their terms of business to the public. Services packagers provide to lenders include advertising and designing products, as well as packaging applications.
But he said packagers may expect lenders to act in the same way: ‘If they were to be regulated as brokers then they would be required to disclose their terms of business. Could they challenge, on anti-competitive grounds, that lenders should disclose the costs they pay for the same services?’
In his previous role as head of packagers Private Label, Knight took legal advice on this point and was told that it was possibly the case.