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Brokers blast FSA as customers lose freedom of choice
Brokers have blasted the Financial Services Authority for failing to condemn the Bank of Ireland deal seeing customers paid £1,000 to remortgage via London & Country only.
Melanie Bien, director at broker Private Finance, said: “You could argue the customer is losing their freedom of choice as they are incentivised to use a particular broker so this is not treating them fairly.
“The problem is that if a borrower is offered a £1,000 incentive to use another broker, in these straitened times most will probably take it. This places that broker at an unfair advantage to the one who originally introduced the business.”
Dominik Lipnicki, director of Your Mortgage Decisions, said it was “a disgrace”.
“It’s unbelievable” he said. “How can this be treating customers fairly?The FSA is supposedly encouraging a holistic approach.
“They don’t want advice to be just one hit on the mortgage but this flies in the face of that no matter how good London & Country might be.
“And where is the loyalty from Bank of Ireland? Many brokers who gave them business will now feel sold down the river.”
Meanwhile Phil Alvey, principal at Derbyshire-based Redwood Financial Management, said this type of exclusive arrangement would destroy client loyalty – something brokers and IFAs are fighting for.
He said it “devalued” the service brokers were able to offer clients which would make it that much harder for them to justify charging an advice fee.
It was particularly worrying given that post Retail Distribution Review advisers may be forced to charge client fees to stay in business, he claimed.
He said: “It may be worth pointing out to the FSA that this undermines the reason for brokers and IFAs to undertake reviews for a client - one of the major purposes of RDR.
“Why would we as we clearly would be unable to compete with those terms? If the lenders are able to offer incentives for clients to use other brokers we no longer have any reason to consider the clients as part of our client bank – this devalues all businesses.”
An FSA spokeswoman refused to comment on the firms involved but said: “As long as customers are given an informed choice in reasonable time that would comply with our treating customers fairly rules.
“Offering incentives in this way is a commercial decision for a firm to make.”
David Hollingworth, communications director at London & Country, added: “Our role is to assist Bank of Ireland in this pilot to help them manage and test how clients engage with any incentives offered by Bank of Ireland, just as we have with other pilots in recent years.”
To read more broker reaction read the original story: Bank of Ireland L&C deal "not TCF"
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Rovergirl wrote:
Are Bank of Ireland or London & Country doing enough at the outset to advise these customers that by taking advantage of the £1000 incentive and using L&C, they are not going to have the benefit of a search and recommendation from from the whole of the mortgage market. London & Country are a fee free broker and as such I understand they are remunerated only by lenders proc fees. In turn London & Country are not searching direct to lender deals which can often be the more competitive option. Fair enough if the customer is given this info at the onset of dealings so they can then make an informed decision as to whether they proceed with L&C or not. But I suspect this is not being made clear by either BOI or L&C.
12 August 2011 15:49:12 GMT
Recommend? (1)John Everson wrote:
Surely this is restricting consumer choice? Why on earth would a client not choose to use London & Country when they're going to be £1000 better off? It may well fall inside TCF guidelines but it smells incredibly dirty to me. The FSA should be ashamed of themselves.
12 August 2011 15:53:26 GMT
Recommend? (0)Rovergirl wrote:
wonder if there is an introducer kick back to BOI as well from L&C on completed cases? If so, win win for both companies BOI clear their back book and introducer fee to reduce £1000 incentive and L&C get the new business.
12 August 2011 15:59:58 GMT
Recommend? (0)Alan Lakey wrote:
Bank of Ireland was a lender that I used frequently and I was always pleased at their good servcie and excellent products. Of course, times change. Now that they no longer need the assistance of brokers they can cock a snook at the market whilst settling into whatever cosy and sneaky deal that suits their current financial urge. I will certainly remember this if ever they come creeping back looking for breadcrumbs of business.
12 August 2011 16:01:32 GMT
Recommend? (1)John Everson wrote:
I agree Alan. My firm used Bank of Ireland, well Bristol & West, quite heavily while they were still lending as the did have good service and excellent products. This deal has a really bad smell about it and I just hope they remember that us brokers have long memories!
12 August 2011 16:06:27 GMT
Recommend? (0)david wrote:
BROKERS UNITE - AND STOP USING BOI let them feel the anger of 40,000 introducers suddenly wiping them off the sourcing tables ! You dont realsie how much power 40,000 brokers have - BOI would have to apologise within 4 months or face asking the treasury for yet more hand outs !!!!!
12 August 2011 18:05:54 GMT
Recommend? (1)Adam Guratsky wrote:
If I remember rightly, the FSA warned some 3 years ago that looking forward, small independent brokers should consider uniting and merging. At the time we all thought, I'm not sacrificing my hard created business and my hard won clients. Some even thought it was a way for the FSA to reduce the number of business it needed to monitor. Now it seems that the FSA is using the tactic of "if we call it a "commercial decision" we can bypass TCF and still reduce the number of companies we have to monitor. In case you forgot, TCF went out the window when dual pricing was classed as a "commercial decision by the lender" and outside TCF rules. A typical scenario is Santander offering poorer value retention products to its customers than could be secured via Abbey for Intermediaries. Furthermore, Santander actually prevents existing Santander & A&L customers applying for the better rates from the AFI range through brokers. Commercial or TCF: should we vote or just ask the FSA what they think? Probably 2 predictable results!!!!!! As brokers, we have to accept that money talks, and only the banks have any (mostly ours)so when it comes to the FSA, why do we still think they are a representative trade body. They are regulators without the resource or skill to take on the banks. By their own admission their best people are head-hunted by big financial institutions to find loopholes. If we had the same resources, wouldn't we? Boycotting BOI might make you feel better but it won't bring parity back to the field.
12 August 2011 21:08:22 GMT
Recommend? (0)Annony-mouse! wrote:
well this is the powers that be smacking the small independant broker in the face. I feel unfortunatly some of you guys are out of touch. For a start there is no where near 40,000 broker in the uk, latest stats show less than 10,000,what power have brokers got?? AMI is no use nor ornament. Banks do not need brokers anymore - they have vast distribution networks through L&C and Countrywide as well as a massive branch base which they are holding onto. They detest paying proc fees when they can get the same level of lending from branches. Look ast Lloyds group and thier blight to get brokers off thier panel 900 gone - only one has been let back on. I was an employee off the bank of Ireland at a decent level to know that the end result will be no procs and fee only ie RDR, with better products direct ie higher LTV & lower rates and incentives for the client. And for the boys saying "boycott BOI" are you mad- do a search on for a BOI product for a client, guess what "no products", post office direct my friends - they pulled out Jan 2009! The Banks feel that brokers are where dodgy lending comes from - dont blame the players blame the game, they employ BDM to "show you how to get business through hush hush" and they say ooh in accurate data. I wouldny worry about the L&C deal brothers and sister BOI will retain all sub 75% Ltv (my pediction) and give all thier 90% BTL, Self cert, HMO business to the broker. Yes this is a slap in our faces, who are we kidding if Halifax came with a 95% LTV 2 year fixed witha £499 fee free val and £1000 cashback - your not gonna place it???. The FSA are a joke, they have bled the intermediary market dry - with no support, prosecuted brokers, supporting the banks and turning a blind eye for serious breaches ie letting them sell PPI for a start. My friends this is the NEW WORLD ORDER and the Banks are the ones that will win, at least in this generation of brokers. Sorry to rain on the parade but the truth hurts. PS the FSA are run by the Banks for the Banks, brokers were useful once, now they see them as a hinderance.Its the old boys club my friends - they all move in the same circles and go to the same private clubs and have lunch at Claridges & The Ritz. I wish everyone luck - we all need it!
13 August 2011 01:32:33 GMT
Recommend? (0)Roy of the Rovers wrote:
Ladies and Gentlemen for the 8-10-12000 of us left by my reckoning we can't do anything about BoI - that was years ago. They don't even lend here now. I'm a small independent and now is the the time someone like Nigel Stockton should get involved. He's meant to be a broker now but my monet is he'd do or if not done exactly the same as L&C. So?
13 August 2011 02:27:20 GMT
Recommend? (0)the truth ? !! wrote:
there is no point in carrying on engaging with this inherently corrupt system.. best get out my friends... it's sad that actually the real losers are the the very consumers the FSA was supposed to protect...
14 August 2011 11:09:18 GMT
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