The introduction of Halifax’s broker fee cap policy could be seen as an “unfair restraint on trade”, according to the Association of Mortgage Intermediaries.
Halifax, owned by Lloyds Banking Group, is introducing a policy which outlines the maximum mortgage brokers can charge for providing its products.
Starting from June 1, the lender will introduce a cap of 1 per cent of loan amount or £1,500, depending on which is greater.
However, the AMI cautioned that, under competition law, placing a cap on fees could be seen by some as an unfair restraint in trade or an attempt to introduce “resale price maintenance”.
The association added it was “concerned” that some intermediaries will see this as a market norm and gravitate their fees policy towards it.
AMI chief executive, Robert Sinclair, said: “This intervention in the market by publication of this policy is unhelpful.
I have been aware for some time that Lloyds Banking Group along with other lenders have been monitoring intermediary fees and having both informal and formal discussions with firms to establish ‘fairness’ and appropriateness,” he said.
“To date these discussions have been relevant and helpful.”
Sinclair added that he did not think regulation has dictated to lenders that they should determine the fees an intermediary charges.
“We support fee ‘outliers’ being challenged by regulators and networks in a constructive way, not by those whose products we are advising on and distributing.
“That seems to me to be a slippery slope towards price-setting for a market and potentially restricting consumer choice.”
Loss of trust
The association additionally clarified that it had no issue with the amounts cited in the announcement, nor lenders actively reviewing fees internally, instead identifying the principle of going public with this information as problematic.
It explained this signals a loss of trust in the ability of intermediary firms to accurately assess the fair value of their own service offerings.
“We are concerned that this move will encourage other lenders to add their policies to the public domain, adding layers of confusion, with a range of ‘fee caps’ that will not act in the interest of all consumers,” the AMI warned.
“The AMI does not wish to see consumers being excluded from some lenders because of their fees policy which would still be the best and cheapest outcome for the consumer.”
Additionally, the AMI said it does not consider that it is the role of a lender to dictate the fee policy of Financial Conduct Authority regulated intermediary firms.
It detailed that the FCA consumer duty is “clear” that each entity is responsible for its own fair value assessment.
“Indeed, the rules indicate that it is for the advisory firms at the end of the chain to make the assessment that all costs, including that the total cost of borrowing is suitable for the consumer,” it added.
It cautioned that the broker fees policy “interjects the lender into the wrong part of the process”.
