credit crunch and dual pricing in the mortgage market

Everybody in the mortgage industry is suffering to some degree from the effects of the current 'credit crunch'. I am to some extent more aware than others due to having direct contact with various intermediaries and individuals in the mortgage and lending market that some businesses have been hit very hard.

Mortgage Advisers seem to be suffering more so to some extent due to the actions of a number of high profile high street lenders, who are offering preferential terms to direct branch customers. In the broker community this is being referred to as dual pricing.
These lenders have previously benefited greatly from the mortgage broker market and many have had majority of their new business introduced by intermediaries. It is estimated that overall nearly 75-80% of past mortgage business written has been via intermediaries.

It is as a result of the big volumes of business, which has traditionally been introduced by brokers that Lenders were offering exclusives and better terms for broker business rather than direct business.

It is now with the mortgage market in such a state that these lenders are causing a good deal of distress to brokers, as a result of this dual pricing.
The lenders and the FSA have shown very little sympathy to this matter. The lenders see dual pricing as a short-term expedient to control the flow of lending. With reduced liquidity available in the market and the high cost of funds, lenders are keen to control their new lending.

The FSA has commented on the subject of dual pricing. It does not believe that lenders are doing anything wrong. It states that Lenders are entirely free to determine how they price their products for each distribution channel. The FSA has made it clear that it will not intervene to remove dual pricing from the market place.
Until dual pricing finally disappears, it is vital that advisers face up to the issue rather than surrender to it. Mortgage Advisers as I see it have two choices they either let the customer know that some lenders are offering different rates to direct customers and that they, as a broker do not have access to these products and advise them as usual on what is available to them from their panel of products. If this is done then aaccording to the FSA the Adviser has acted properly and treated his customers fairly and therefore discharged his duties.

The second option is, which a number of financial service market pundits state that the brokers can if they wish direct customers to high street branches if the rates are more attractive and charge customers a finder’s fee. This to a number of brokers sounds very strange. Most of the broker community do not feel comfortable in doing this and cannot see the justification for seeking payment for this.
How long before some normality returns to the markets?