Eddie Smith, managing director of the PMPA, revealed that a ‘sizeable’ amount of money had been allocated to the holding fund, though he could not confirm an exact figure. Smith stressed that none of its members were in any difficulties, but said PMPA saw the fund as a sensible move, demonstrating its financial strength.
Smith said: “For lenders it’s a key issue – what is going to safeguard the money they have paid out to brokers? I don’t think it will be needed, but we are doing it so lenders can see we are taking a sensible approach and negating risks.”
PMPA’s move follows on from both c2 and Trustguard creating £250,000 funds to protect brokers’ proc fees.
David Wylie, chairman of c2, said: “It’s crucial that the guarantees in place are robust rather than just press comment. That’s why we have set money aside and away from our day-to-day cashflow. Particularly during this climate, packagers are going to have to offer robust guarantees. Those that don’t will be in a difficult position to convince brokers why they haven’t.”
John Rice, managing director of the Regulatory Alliance of Mortgage Packagers, commented: “This has been on RAMP’s agenda for a while, though we haven’t come to a conclusion. It’s a lot more complex than it seems. But as soon as you start talking about it people ask whether there is a problem, when generally there is not, as most packagers are well funded.”
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