Last month the FSA sent letters to chief executives supervised by the Major Retail Groups Division and the Retails Firms Division stating its concern over inducement payments to secure distribution after 31 October.
Robin Gordon-Walker, spokesman at the FSA, said: “An inducement payment is anything that conflicts with the interest of the consumer. We have not got a straight set of examples of where something is or is not deemed an inducement, so lenders should be aware of this.”
The FSA said the definition of inducement payments would be assessed on a case-by-case basis after ‘Mortgage Day’ and it could not rule out that marketing and technology costs would be deemed as payment inducements.
Tim Sturley, head of business development at Mortgage Express, said lenders should not be paying money to the networks. He said: “It has been our policy for some time not to pay cash or other inducements in exchange for Mortgage Express products to appear on network panels.”
“Given the FSA’s guidance, networks will have to look at other ways to cover their costs, and lenders will need to ensure they are not paying for this service beyond 31 October,” he added.
