The Council of Mortgage Lenders’ (CML) draft response to the Treasury’s consultation paper on mortgage regulation has spurred mixed responses from packagers over regulation.
The response, which recommends companies provid- ing administrative functions should not be regulated, indicates packagers will not be regulated, a move which Mark Charlesworth, managing director of The Mortgage Operation, disagrees with.
He said: ‘If you look at a packager’s role, it is not just pure processing. The larger ones have a new business desk, which doesn’t give advice, but does help brokers to source lenders which will accept their clients’ circumstances.’
He added: ‘Although we do not give advice to a client, we provide information to brokers to help them formulate their advice. At one end of the scale there are regulated lenders, and at the other there are mortgage brokers that are regulated. If there is a body in the middle that provides a variety of services, it does not make sense for it not to be regulated.’
Steve Scholes, director of mortgages at Scottish Life, holds equally strong views.
‘I believe packagers should be regulated because an administrative service benefits the customer which regulation is focused on,’ he said.
The CML’s response says firms involved in the administrative process that do not have contact with clients, or who do not operate as part of an intermediary, do not need to be regulated.
Bernard Clarke, communications manager for the CML, said: ‘If this is what packagers are doing then it could include them. There is no need for them to be regulated if they simply provide an administrative service. Lenders will be regulated and they will ensure all aspects of their business will meet the statutory requirements.’
Some packagers agree with the CML’s recommendations with regards to packagers which only complete administrative functions. However, if advice comes into the equation at any point, there is a belief that regulation is needed.
David Copland, sales and marketing director at Pink Home Loans, said: ‘I don’t think there is a need for packagers to be regulated if we are simply performing third-party assistance to brokers. However, if the packager is involved in dealing with clients, then there is a need for regulation.’