Newspaper article The Evening Standard (London, England)

Avoid a Double Agent

Newspaper article The Evening Standard (London, England)

Avoid a Double Agent

Article excerpt


Check that a mortgage broker is truly independent before you seek his advice, warns Lorna Bourke

WHEN is a mortgage broker not a mortgage broker?

When he is also a tied agent. Confusion reigns in the mortgage market with homebuyers not knowing whether they are dealing with a truly independent broker or someone tied to one, or more, lenders.

The reason is that the Treasury, in its wisdom, has seen fit to leave mortgage intermediaries unregulated, and it is left to the lenders to impose a voluntary code of conduct on the professionals they deal with. This is less than satisfactory, as one Homes & Property reader found out.

"I contacted one of the advertisers in your issue of 14 February to enquire about a mortgage," writes Alan Myers. "As there was nothing in the advert to the contrary, I was expecting to speak to an independent financial adviser. However, it turned out that the company concerned, Mayfair Mortgage Centre, is actually a tied agent to one company, which is not what I wanted.

"I was under the impression from articles and comments in the general press that a firm was supposed to indicate whether or not it was independent and, if not, to whom it was tied. Has this regulation been scrapped?" asks Mr Myers.

The truth is that the situation is a complete dog's dinner. Mortgage intermediaries who do not advise on anything other than home loans are not required to be registered with any of the regulators - although to do business, they effectively have to register with the Council of Mortgage Lenders (CML) and abide by the voluntary code of conduct. They may be a tied agent or a totally independent broker.

Moreover, a tied agent can be the agent for several lenders and appear to be a broker.

The serious brokers are also independent financial intermediaries registered with the Financial Services Authority and able to give totally independent advice on all the home loans on offer, as well as associated investment products such as endowment policies, Isas and the like. These are the true independent brokers.

To make matters worse, the Treasury has decided to do away with "polarisation", the requirement for an intermediary to be either a tied agent offering the products of one company, or an independent financial adviser. …

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