Cornwall-based brokerage Harris Begley Ltd contacted Mortgage Introducer explaining L&G was withholding in excess of £2,000 of its mortgage commission which comes via PaymentShield. It said it has been out of pocket now for over two months and believes many firms are in the same boat.
Graham Newitt, managing director of intermediary solutions at L&G, admitted the money has been withheld due to PaymentShield's agency account number, which the fee was to be paid into, not having permissions to conduct mortgage business.
Newitt explained: "We don't have an active trading relationship with PaymentShield's latest guise as a mortgage club. Despite this, some of its members have sent mortgage business to L&G Mortgage Club. We only found this out after the event.
"They then claimed their procuration fees and asked for the money to be paid to a payment agency number. But this number does not have FSA permission to conduct mortgage business."
Paul Newitt said L&G held a conference call with Payment- Shield this week and has agreed to pay the money to an authorised agency number after it checks the individual firms are also properly registered.
Newitt added: "There is probably around 100 cases which have been affected by this. There is no great conspiracy going on. It's just one of those unfortunate errors that occurs when companies launch themselves back into the market and haven't joined from A to Z properly."
But Graham Boulger, group commissions director at PaymentShield, said: "Mortgage clubs don't need authorisation to receive fees. L&G has misunderstood that. But now we have a new agency number, hopefully everything is sorted."
Carole Brennan, at Harris Begley Ltd, commented: "L&G has said it will phase release the money each week over the next month but who knows where we sit in the queue. Potentially, there could be hundreds of firms waiting for their payments.
"We couldn't get any information out of L&G or PaymentShield. Eventually we were told by L&G that the agency account which the money was supposed to be paid into was closed all the way back in January. And PaymentShield said the problem had something to do with 'Mortgage Day'. It's caused us a lot of hassle."
