UK watchdog tells mortgage brokers to disclose more

LONDON, May 15 (Reuters) - Britain's financial watchdog told mortgage brokers on Thursday to inform customers if they can get a better deal by contacting banks directly instead of through an intermediary, a move that could add to pressure in the sector.

Typically, the majority of UK mortgages are sold through intermediaries, with broker business accounting for more than 70 percent of the total in 2007.

But brokers have come under increased pressure since the start of the credit crunch as mortgage banks, wrestling with the impact of troubled wholesale funding markets, are raising the amount of direct business, hoping to retain more control over their distribution and credit quality.

Many lenders are withdrawing from the intermediary market or introducing "dual pricing" to offer better deals to customers who come to them directly.

Speaking to mortgage intermediaries at an industry gathering on Thursday, the Financial Services Authority called for comments but said consumers should still be offered clarity. "For example, if a customer goes to a whole of market intermediary, and the intermediary recognises that, in current market conditions, there may be more competitive products in the market other than those available to the intermediary, that may be of interest to the customer, we think that there must be acknowledgement of this," Jonathan Fischel, FSA's head of Mortgage and Credit Unions, said on Thursday.

"We do not think this an overly onerous disclosure."

(Reporting by Clara Ferreira-Marques; editing by Rory Channing)