Last week the FSA said in a policy statement that lenders didn’t have to disclose their reasons for striking brokers off panel, acknowledging that “there are reasons why a lender might want to withhold this information”.
But Robert Sinclair, director of AMI, said: “Lenders must ensure a claim that is made is adequately verified and the appropriate action is therefore taken, and that there is some form of right of appeal. That is the society I want to live in, not one where people can be taken off at the knee.”
And he added: “While we’re passionate about getting bad practice out of the industry it has to be in a way that has due process and a right of appeal.”
Sinclair said while there are only six large lenders dominating the mortgage market being taken off one of those panels could destroy an adviser’s business.
The FSA must build a case against a broker suspected of fraud or mistreatment of customers and offer people the chance to defend themselves, while lenders can stop doing business with brokers without disclosing why.
David Ewing, managing director of Essex-based network Ingard, believes brokers are working in an environment that bucks the rule of the land where a person is innocent till proven otherwise.
He said: “As an industry there appears to be a guilty till proven innocent regime, led by the FSA and feeding down through lenders and to an extent the networks also.”
Ewing said failure to provide information upon request from a lender may result in brokers’ termination from the panel, as could information that differs from an earlier application.
He added: “In some recent talks with two major high street lenders it was apparent that they will each have removed some 500 brokers from their panel this year alone.”
But Nigel Stockton, financial services director at Countrywide, said lenders were telling networks why brokers were being removed.
He said: “It goes back to communication because lenders do think through really carefully who they take off their panel. In the last three or four years it has got much better and it’s rare you won’t know why you’ve been kicked off.”
Jennifer Bourne, senior policy adviser at the Council of Mortgage Lenders, admitted that not all members were up to scratch when it comes to giving banned brokers a right of appeal.
She said: “The lenders I speak to are aware there is a need for due process and that includes having a right of appeal.
“I’m not saying they all have that in place as well as they should. But they are well aware that striking someone from their panel without good reason does impact their livelihood.”
Bourne added that live investigations into brokers sometimes stops lenders giving full information about why they have been removed from panels.
Sinclair said while he understood lenders’ need to be able to remove brokers from their panels there was “a difficulty about due process”.
He said: “About two years ago some of the major banking groups started to remove people from their panels because they were looking at their files and identifying problems.
“But there is a difficulty about due process. It’s the problem the Financial Services Authority has in terms of making sure they let everyone have an appropriate right of appeal before they eventually lose their livelihood.”
