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Jonathan Fischel, head of mortgages and credit unions at the FSA, made the financial watchdog’s stance clear at the Mortgage Business Expo in Manchester today (15 May).

"Lenders are not obliged to deal through intermediaries. Lenders are not in breach of any FSA rules if they go down this route and not every product in the market will be available to any one intermediary," he said.

Fischel admitted that the regulator was concerned about consumers’ access to advice and the cost of the advice but is not in a position to stop lenders continuing with what is a commercial decision.

He said the FSA had been working with the Association of Mortgage Intermediaries (AMI) on two particular issues, one being broker’s ability to attain a key facts illustration (KFI) and the content of the KFI, the other was the responsibilities of a whole of market intermediary given the current situation.

In terms of brokers being unable to access the deals currently offered by many lenders direct to the consumer, Fischel said there was an option to advise the client to go direct and charge a fee for that advice.

"The crucial point is ensuring that the customer is clear about what they are being provided with. The intermediary should clarify that there are deals only available direct from certain lenders. We don’t however think the intermediary needs to be specific about those lenders and the deals," he said.

According to Richard Farr, director of the AMI, it is working closely with the regulator on the dual pricing issue and believes the market is starting to see the tide turn in terms of a reduction in the price differential between direct and intermediary products.

The AMI also recently urged lenders to keep intermediary channels open. (See story.)

Thousands of advisers also joined the debate on FT Adviser on the issue of dual pricing. To read the blog and comment click here.