Brokers blast FSA as customers lose freedom of choice
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”