Lender cartel ‘targeting proc fee cull’

An industry source, who wished to remain anonymous, told Mortgage Introducer that a ‘number’ of lenders were involved in talks over reducing procuration fees, which would infringe cartel laws that prevent price fixing.

In recent weeks, lenders that have reduced their procuration fees include Mortgages plc, Advantage Home Loans and Lehman Brothers.

The source stated it was ‘non-standard’ lenders that were involved and not large lenders, which ‘would know better’. The source warned: “This is an important issue.”

However, brokers could find little action being taken on their behalf, as the FSA was not forthcoming in action that could be taken and declined to comment, while the Office of Fair Trading stated it was an issue for the regulator as it did not relate to consumers.

Thomas Reeh, chief executive of blackandwhite.co.uk, said: “Speculation like this always runs rife. The evidence I’ve seen is that lenders are definitely cutting procuration fees across the board and upping fees on the mortgages. But reducing procuration fees is cutting off their noses to spite their faces, because who’s going to sell their mortgages? I’d be surprised if any cartels were in operation. It’s possible and there’s no doubt lenders are under pressure.”

Eddie Smith, managing director of the Professional Mortgage Packagers Alliance, said: “It’s unlikely it’s happened just because it is against the rules. There might be the perception that lenders have spoken about it, as in meetings such as the Council of Mortgage Lenders forum, lenders would talk about the issues they have.”

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