"This intervention in the market by publication of this policy is unhelpful"
The Association of Mortgage Intermediaries (AMI) has voiced concerns over a new policy from Lloyds Banking Group, which caps fees which brokers can charge for mortgage services.
The policy, effective from June 1, sets a broker fee limit at 1% of the loan amount or £1,500, whichever is greater, for loans provided by Halifax, which is part of Lloyds Banking Group.
The lender said the policy is in accordance with the Financial Conduct Authority’s (FCA) Consumer Duty guidelines to ensure fair value for customers.
However, AMI criticises the move, arguing that the FCA’s Consumer Duty rules require advisory firms to assess fair value independently.
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“AMI does not consider that it is the role of a lender to dictate the fee policy of FCA regulated intermediary firms,” the trade body said in a statement. “FCA Consumer Duty is clear that each entity is responsible for its own fair value assessment.
“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 that the total cost of borrowing is suitable for the consumer. This policy interjects the lender into the wrong part of the process.”
AMI contends that by setting fee limits, Lloyds could undermine trust in brokers’ ability to determine the fair value of their services and fears that this could lead other lenders to publish similar policies, potentially confusing consumers and unfairly influencing market fees.
“This intervention in the market by publication of this policy is unhelpful,” commented Robert Sinclair (pictured), AMI chief executive. “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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