That is the view of Michael Coogan, director-general of the Council of Mortgage Lenders, who believed that concerns over whether brokers were acting purely on their client’s behalf when arranging finance would be firmly in the regulator’s sights in the coming months.
In an interview with Mortgage Introducer, Coogan said: “The FSA has consistently flagged up concerns about elements of advice in the broker market and it is doing more work on quality of advice. It has, in the Retail Distribution Review, highlighted the issue of commission and potential bias. In the coming 12-18 months, there may be more of a concern about whether brokers are acting on the customer’s behalf, or their own, when they move clients between lenders.”
Coogan believed this area would become particularly important as consumers moved away from two-year fixed rates to avoid the increasing cost of re-financing, and brokers were forced to evaluate their business strategy as clients remortgaged less frequently.
Richard Fox, chief executive of the Society of Mortgage Professionals, agreed:
“The FSA is publishing a quality of advice study next year and one of the big issues will be if the broker is always acting in the best interests of the client. However, the same question can also be asked of lenders in the way they design and price their products.”
