Regulator finds some mortgage brokers 'unaware of rules'

An investigation by the Financial Regulator into allegations of a potential conflict of interest between mortgage brokers and estate agents found an unspecified number of companies were unaware of their obligations.

The inquiry began last July following allegations that some mortgage brokers may have shared information on clients' purchasing power with estate agents seeking to sell them a property.

The practice may have resulted in inflated prices being paid for properties.

Some estate agency firms also sell mortgages while some larger firms operate their own broking business or offer mortgages through an affiliate company.

Publishing its findings today the regulator said it had investigated 91 of the 2,100 mortgage intermediaries in the market to examine how they handled potential conflicts of interest when also providing property services.

While most of the companies examined had avoided conflicts of interest, a number "did not differentiate between services regulated by the Financial Regulator and those that are not".

"This lack of differentiation between services was found to have caused confusion, with some customers feeling that the Financial Regulator regulated all services provided by the mortgage intermediary."

The Regulator said it has written to all mortgage brokers to remind them of their obligations under the Consumer Protection Code in relation to conflicts of interest.

The investigation also found "a number of intermediaries might not have been familiar with their obligations under the Code, including the requirement to draw up and provide a 'terms of business' document to each consumer prior to providing the first service to that consumer".

A spokeswoman for the Regulator was unable to say how many mortgage intermediaries had failed to differentiate between regulated services or the number that were unaware of their obligations under the Code.

She said the "Regulator cannot comment on the number of firms in breach and we cannot comment on any breaches or sanctions unless they are issued publicly".