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DA vs AR: How will a broker directory be fair if lender distribution is a metric? – Star Letter 05/04/2019

  • 05/04/2019
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Each week Mortgage Solutions and its sister title Specialist Lending Solutions select the most thoughtful or thought-provoking comments from our readers.


This week it was three different actions by two industry regulators that prompted our top comments.

The first one is from Michael Norwood for his response to the article: FCA on the Mortgages Market Study: Advice rules oversight must not obstruct execution-only innovation.

He said: “I’m amazed the FCA has no clear understanding that very many directly authorised (DA) brokers have had access to some lenders restricted to the benefit of networks over many years.

They don’t appreciate how this can skew the number of lenders available to those clients and therefore the outcome in the FCA study.

There is no reason other than contractual that this should continue i.e. networks have a clear market advantage to dominate distribution and keep members, to the detriment of DA brokers.

How would a future directory appear as fair if one of the metrics is lender distribution for comparing a DA to an authorised representative (AR)?”


Prevent leasehold scandal

Second up is from Arron Bardoe for his response to the article: Conveyancing regulator raises concerns over cost transparency and leasehold awareness.

He said: “I would add the following to the next round of checks:

  1. Solicitors to be transparent about their relationship with developers and estate agents. This should include referral fees; a statement on client confidentiality; and reiterating they will put the client’s interest ahead of the referrer.
  2. All fees should be stated as inclusive of VAT rather than separated to make them appear cheaper.
  3. Increases in ground rent should be clearly explained and put in context. Stating they double every 10 years is not enough. Perhaps in bold letters: ‘This rate of increase would be significantly greater than the current level of inflation and could significantly reduce the value of your home on resale or mean you cannot sell your home.’

I wonder if the current scandal would have happened if this was required.”


PII cover increase

Finally Terry Arch chipped in with his response to the article: Hasty regulatory timetable on broker PII cover rise slammed by AMI.

He said: “The FCA says that they indicated in October that compensation would be increased, on 1 April, so we should have plenty of time to implement it.

This may be the case if they did not hit the industry every two or three months with new changes – the biggest at present being the Senior Managers and Certification Regime (SMCR).

Give the industry a break and let things settle down every time they bring in something else.

I suppose the logic is to put various things in place over a short period of time, so that the industry makes mistakes, and to then hit them with a big fine to keep their cash flow going.

The financial pot is not bottomless.”



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