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AMI says lenders publicising broker fee caps ‘stretches’ Consumer Duty needs to ‘extreme’

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  • 03/05/2024
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AMI says lenders publicising broker fee caps ‘stretches’ Consumer Duty needs to ‘extreme’
The Association of Mortgage Intermediaries (AMI) has said that Lloyds Banking Group’s move to publicise the maximum broker fee cap “stretches their Consumer Duty accountabilities to an extreme".

In a statement in response to Halifax confirming a maximum broker fee cap, AMI said that Consumer Duty says that each entity is “responsible for its own fair value assessment, and indeed the rules indicate that it is for the advisory firms at the end of the chain to make the assessment that all costs, including… the total cost of borrowing, [are] suitable for the consumer”.

The trade body said that the policy “interjects the lender into the wrong part of the process”.

The firm continued that it had no issue with the amounts cited in the announcement or with lenders actively reviewing fees internally.

AMI said: “The issue is the principle of going public with this information and the loss of trust it signals in the ability of intermediary firms to accurately assess the fair value of their own service offerings.

“We are concerned that this move will encourage other lenders to add their policies to the public domain, adding layers of confusion, with a range of ‘fee caps’ that will not act in the interests of all consumers. AMI does not wish to see consumers being excluded from some lenders because of their fees policy, which would still be the best and cheapest outcome for the consumer.”

The trade body continued on to say that, under Competition Law, placing a cap on fees could be viewed as an “unfair restraint on trade or an attempt to introduce ‘resale price maintenance’”.

AMI said that it was “concerned that some intermediaries will see this as a market norm and gravitate their fees policy towards it”.

It added that, by defining this as broker policy, it “misses the point on the work done by fully qualified and regulated advisory firms”.

Robert Sinclair (pictured), AMI chief executive, said: “This intervention in the market by publication of this policy is unhelpful. I have been aware for some time that Lloyds Banking Group, along with other lenders, have been monitoring intermediary fees and having both informal and formal discussions with firms to establish ‘fairness’ and appropriateness. To date, these discussions have been relevant and helpful.

“I do not think that regulation has dictated to lenders that they should determine the fees an intermediary charges. It stretches their Consumer Duty accountabilities to an extreme.

“We support fee ‘outliers’ being challenged by regulators and networks in a constructive way, not by those whose products we are advising on and distributing. That seems to me to be a slippery slope towards price-setting for a market and potentially restricting consumer choice.”

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