According to an industry source there are a number of brokers who believe as long as they have such an arrangement with a colleague they can avoid regulation.
Speaking anonymously the source said: “There are guys out there who seem to think they will never get caught, I have come across a few myself and I have warned them they are operating on borrowed time.”
Robin Gordon-Walker, FSA spokesman, warned unregulated brokers who were breaking the law that the regulator was in the process of policing the boundaries.
“Any practice of this kind would be a very serious breach of the rules and would have grave consequences for both the regulated and unregulated brokers. It could lead to potential criminal cases,” he said.
Linda Will, managing director of Yorkshire Building Society’s intermediary-only lender Accord Mortgages, commented: “From a lender’s perspective it is difficult to check how frequently this is happening.
“We always check broker’s addresses but if there is complete collusion between the authorised and unauthorised intermediaries then it makes it harder to spot.
“We would probably only find out if the punter contacted us saying they were sold a mortgage by ‘so and so’ and this differed from our records.”
Will added that if Accord spotted this happening it would ‘bounce’ the case.
Tony Jones, managing director of Pink Home Loans, suggested that any broker who operated within the unregulated mortgage sector but still came by the occasional regulated case should set up an introducer arrangement.
He said: “That way the broker can still service the client and get some income from the deal.”
He added that anyone who allowed someone to use his or her FSA number was taking a large and unnecessary risk.
