Lender Birmingham Midshires (BM) Solutions, will guarantee brokers are paid their commission fees should anything happen to the packager they are using to feed cases into the lender.
Steve Sandiford, head of borrowing products at BM Solutions, said the move was a response to nervousness in the broker market following the recent demise of The Mortgage Placement Company, and other murmurings over the future for packagers as regulation comes into focus.
He said: ‘We have detected a nervousness that has been bubbling under the surface and this is aimed at dealing with that.’
Sandiford said he expected some lenders to do the same, but did not feel it would become standard practice. He said: ‘I think some will follow suit, but am not sure if all will have the financial platform to do so.’
However, Sandiford said if lenders were using packagers for their distribution, then they should make sure it was a safe avenue for brokers, and would not put their business at risk.
Bill Dudgeon, managing director of another HBOS subsidiary, The Mortgage Business, said he had no plans as yet to offer such a guarantee.
He said: ‘We have stuck to doing due diligence and dealing with those packagers we see fit.’
As such he said he was happy the packagers dealt with were fully capable of meeting their obligations.
Mark Graves, managing director of intermediary Mortgages Direct, said the move from BM Solutions would not entice him into using the packaging market and questioned how positive it was for packagers to have the lending sector offering guarantees in case of financial problems.
He said: ‘It puts the idea that there is a chance in the eyes of the client that the packager might go bust. From a packager’s point of view I do not think it is a great sales tool.’
BM Solutions uses a panel of 13 packagers.