The FCA will investigate commercial relationships at the heart of the mortgage industry to assess their impact on consumers.
Speaking at the Brevan Howard Centre for Financial Analysis at Imperial Business School, Christopher Woolard, executive director of strategy and competition at the FCA, said it will assess the relationships between brokers, lenders, panels, price comparison websites, estate agents and builders.
The regulator will look at whether these relationships detract from the functioning of the market and work in the interests of consumers.
Woolard said: “The relationships between brokers, lenders, panels, price comparison websites – even some estate agents and builders – exist for a reason. For many, it is the management of commercial or regulatory risk.
“However, some of these relationships may be detrimental to the overall good-functioning of the mortgage market, or to the interests of consumers. We want to understand in more detail the competition dynamics in this space.”
Following last week’s announcement that the Competitions and Markets Authority (CMA) will probe price comparison sites, the FCA will join forces with the CMA to assess behavioural biases in consumer behaviour to determine whether an undue focus on short-term pricing is causing distortions in the market.
Woolard added: “The question we do want to consider in the market study is whether the tools available to consumers to help them make decisions effectively meet their needs.
“There are of course already many tools to help consumers shop around – brokers, price comparison websites, apps etc. These should assist consumers in searching for the most suitable product for their needs, but we want to consider whether there may be any distortions caused by an undue focus on certain headline charges or features.”
Following the Mortgage Market Review (MMR), intermediated sales represented 50% of mortgages sold in 2009/10. This increased to 67% of the number of sales in Q2 2016, and the FCA is keen to determine whether this was caused by the review.
Woolard said: “The key issue in this area is to what extent there are differences in the outcomes for consumers who obtain their mortgages through a broker versus those who go direct to a lender?”