The Office of Fair Trading has effectively sanctioned the practice of dual pricing by lenders, saying it is permissible as long as lenders do not breach competition law.
The OFT last week contacted Jane Price, broker at Nashelm Mortgage Solutions, detailing its position on dual pricing after she complained to it.
The OFT says dual pricing does not constitute a breach of competition law as long as the lender in question’s share of the mortgage market is not more than 40%.
A statement from the OFT says: “It appears there are a large number of companies offering mortgages and that the market is competitive. It is therefore unlikely that any of the large mortgage lenders hold a dominant position for the purposes of our legislation.”
Mortgage Strategy continues to be inundated with letters by brokers angry about the issue.
Scott Taylor, broker at Advanced Independent Financial Solutions, lost a deal to Woolwich, which offered his client a 5.74% rate with no booking fee on a lifetime tracker.
The only broker alternative for the same product was a 5.99% rate with a £995 fee.
He says: “I would never have known that deal existed had my client not pointed it out. I could have unwittingly signed up my client to an inferior product, thus breaching Treating Customers Fairly principles. How can that be right?”
Last week Mosaic Mortgage Club started a campaign calling on brokers to unite in a bid to stamp out dual pricing, in addition to Mortgage Strategy’s own Dump Dual Pricing campaign.
Rob Waldron, sales manager and mortgage and protection consultant at G&G Financial Services, says: “In a tough market brokers, packagers and lenders should strive to keep relationships cordial, open and functional.”
Amid the row, brokers have been thrown a lifeline.
Figures from the Council of Mortgage Lenders show the number of first-time buyers using brokers increased to 82.5% in Q1 2008 – up 10% compared with the same period last year.
Filed under: Intermediaries, Mortgages
