The move – believed to be the first of its kind - comes as concern grows for thousands of home buyers who could lose out on their property transactions as the ‘M Day’ deadline looms.
The initiative by Moneynet – which has itself won full FSA approval to arrange regulated mortgage contracts – reflects concerns that many UK brokers will not be compliant under the watchdog’s strict new regulations*.
According to FSA sources, less than a third of all mortgage brokers are geared up to trade under the new rules – which means that hundreds of thousands of homebuyers could be left high and dry in mid-transaction.
“This is a potential disaster waiting to happen for many purchasers and sellers,” said Moneynet chief executive Richard Brown.
“We are in the middle of what is traditionally one of the busiest times of the year for mortgage transactions and we learn that the majority of mortgage brokers have not yet applied for authorisation.
“This inevitably means they will be required to cease trading on 31st October. The consequences for homebuyers and sellers could be appalling, with many applicants having to start the entire mortgage process again,” said Brown.
Along with the obvious fears for consumers, Brown said that the wider mortgage market – already struggling on the back of the recent base rate rises – is likely to suffer a considerable body blow.
He urged consumers to check that their broker has the necessary authorisation in place so as to be sure of completing the mortgage transaction uninterrupted.
Frankly, the mortgage industry cannot afford to lose clients at this critical “time of year. Those brokers that have not yet applied for authorisation are unlikely to have the necessary permission in place to trade after 31st October, even if they apply now.”
