Additional costs and reduced choice?

Chris Cummings, marketing director of Sun Bank, said: "This regulation has our full support – it can only improve the industry’s perception in the eyes of the customers and should lead to more people seeking mortgage advice.

However, Cummings warned that further clarification was needed especially over costs. "According to the Treasury, the new regulations will incur a one-off initial cost of £36 million and a recurring cost of £32 million per annum. This is in addition to the planned level of work on voluntary regulation under the Mortgage Code and the industry’s costs in IT development, management time and associated expenses.

"Put simply, that means in an average year where £1 million of new loans are guaranteed, each borrower will pay an extra £68 in the first year simply to cover the stated costs of this new regulatory burden," said Cummings.

Cummings believes that some brokers will decide to opt out rather than face new regulatory hurdles, and others will seek to consolidate.

"The saving grace must be that those firms who are left become more professional, put the clients first and offer an improved level of service."