FCA: Brokers are over-relying on one lender
Some brokers are sending 80% of their cases to just one lender while prompting the Financial Conduct Authority to warn brokers to review whether they are giving the most suitable advice.
Lynda Blackwell, mortgage sector manager at the FCA, told intermediaries at the Mortgage Business Expo in Leeds that the regulator had been looking at where brokers distribute their business.
The data collected showed that while some firms sell the products of more than 60 lenders, the majority are in the 10 to 20 bracket.
Of the 18% of firms that used fewer than 10 lenders, 44% are using three or fewer.
Blackwell said: “When we looked at this in greater detail, we saw instances of brokers doing 80% of their business with one lender.
“That raises questions for us in terms of whether the customer’s needs are being fully taken into account.
“We’ve seen a tendency for some brokers to point the customer in the direction of a favourite product – hopefully not because of the commission it pays. This is an area we’re interested in.”
Blackwell also said the data covered all 4,800 plus firms in the market.
She added: “I think there might be a tendency to think that if you are a very small firm you might be off our radar.
“But the data reported to us by lenders also provides detailed information on intermediaries and we analyse the sales of every broker in the market.”