Anger as CML blames brokers for fraud

The Council of Mortgage Lenders (CML) has come under heavy fire from the intermediary community after its stinging criticism of advisers at an FSA conference last week.

Speaking at the regulator's Mortgage Sector Conference in London, Michael Coogan, director general of the CML, accused some intermediaries of having acted more like salesmen interested in maintaining their cashflow than advisers protecting their customers' interests. The trade body also called for the read-across of the Retail Distribution Review (RDR) into the mortgage market 'sooner, rather than later'.

Coogan highlighted that fraud in misrepresenting borrowers' income was a major concern for the intermediary sector, and called for enhanced training and qualification standards for advisers and a review of the form of remuneration in the sector.

He added: "Only with these measures may we sustainably improve the quality of advice in introduced mortgage cases across the market, and remove poor market behaviours."

Donna Hopton, director of broker forum Cherry, noted that while some advisers had misadvised clients on occasions, advisers only had the offerings that were designed and underwritten by lenders at their disposal.

She explained: "We all accept that no distribution channel is perfect, but considering all the recent claims and criticisms about banks and lenders, it is nothing short of staggering to find a lender representative being critical and damaging about our members, without evidence."

Matthew Wyles, chairman of the CML, made efforts to avoid a war of words between lenders and intermediaries, stressing the importance of both sides working in partnership during difficult times and to avoid 'recriminatory debate'.

"There is no doubt that during the latter stages of the bull market there were some pretty unacceptable practices going on in the lender and intermediary community."

He added: "One consequence of the credit crunch is that a lot of the marginal businesses and dishonest practices have been washed away."

Coogan found an unlikely ally in Robert Sinclair, director of the Association of Mortgage Intermediaries (AMI), who pointed out that he had also criticised lenders in his speech.

Sinclair commented: "From a broker perspective, we do have some issues to answer, because there are a small number of intermediaries being taken to enforcement action at the moment."

He added: "Undoubtedly, many intermediaries will feel got at, because there is a lot of negative sentiment in his comments. Lots of very good intermediaries do a good job, but they do not see what some of their brethren do. We should focus on letting the FSA weed out the bad intermediaries."

The regulator continued to 'weed out bad intermediaries' as it stepped up its crackdown on mortgage fraud last week.

Gabriel Aramide was banned and fined £101,279 for submitting a fraudulent mortgage application and for concealing a fraud conviction when applying to the FSA for approval as a director. Sofique Ullah was also censured for submitting mortgage applications supported by 'inaccurate and misleading' employment details for himself and on behalf of his clients.