Lenders are limiting consumer choice – AMI

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MORTGAGE brokers have complained to the City watchdog about moves by high-street lenders to limit the amount of business they do through intermediaries.

The Association of Mortgage Intermediaries (AMI) has lodged a complaint with the Financial Services Authority about recent changes some lenders have made to their mortgage ranges, limiting the deals available through brokers and raising the cost of the others.

Increasing numbers of consumers are thought to be turning to brokers for help in negotiating the rapidly changing mortgage market.

The credit crunch has led to the most competitive mortgage deals being pulled soon after they are launched and consumers taking out a home loan through a broker have a better chance of catching them before they disappear.

AMI says lenders’ branch-based business is suffering as a result of the high numbers of people choosing to use a broker. It said margins on deals taken out directly with the lender tended to be higher because they did not have to pay commission to an intermediary. As a result, some of the UK’s biggest mortgage providers are trying to redress the balance by offering their best deals only to people who contact them directly.

Chris Cummings, director general of AMI, said: “Lenders are under pressure to rebuild their capital position, and as a result are trying to increase margins and drive more people through their branches. But we have taken this up with the FSA and said it is consumers who are losing out.”

The FSA indicated it would be unlikely to intervene in the dispute, saying that under its regulations, lenders were not obliged to offer mortgages through brokers. A spokes-woman said if certain lenders decided to offer cheaper to direct customers, it would not be in consumers’ best interests to prevent this.