Vic Jannels, group managing director of All Types of Mortgages (AToM), said he is aware that some lenders will be quoting just the procuration fee on KFIs where cases involve a pure packager, whereas for packagers that have elected to become regulated both the procuration fee and the packager fee will be shown as one lump sum.
Jannels said this could have dire consequences for the packaging industry.
He commented: “The KFI for an intermediary of a pure packager who draws down a KFI from the lender or a trading platform will not show the packager fee element. Confusion will arise where the intermediary draws down the same KFI and then uses a regulated packager where the lender KFI will show the full procuration fee including the packager fee element.
“In terms of transparency this may cause the client to doubt the integrity of the broker given the differential between the first KFI and the lender’s KFI. Could this lead to accusations of non-disclosure on the first KFI?”
Jannels warned: “This will lead to potential inequality of treatment between pure and regulated packagers which could be considered anti-competitive.”
Jannels explained that the packaging fee is all that is needed on the KFI as the FSA has chosen not to regulate packagers, unless they have contact with the client.
Tony Jones, managing director of Pink Home Loans, agreed. He said: “We should be operating from a level playing filed. We have heard that some lenders are considering undertaking this practice but it would give an unfair advantage to unregulated packagers.”
