FSE London: FCA mortgage market study to launch this year

Ryan Bembridge

September 14, 2016

FCA financial conduct authority

The Financial Conduct Authority will formally launch its new mortgage market study by the end of the year.

Speaking at FSE 2016 in London today Deb Jones, director of competition at the Financial Conduct Authority, said the study will look at whether the Mortgage Market Review had any “unintended consequences”, why intermediaries have taken a bigger share of the market and whether consumer tools such as price comparison websites can do a better job in helping people.

Jones said: “We [will] scope the market study and develop what’s called the terms of reference. That will be published towards the end of this year and will signal the formal launch of the market study.

“Soon after that we will start to gather the information we require through surveys, direct requests for information and so on.”

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The regulator will use product sales data in a bid to minimise burdens on firms and information requests will be trialled with smaller groups of firms to see if questions provide useful evidence before continuing.

Jones said the regulator will ask ‘What is the impact of increased intermediation in the mortgage sector on consumer outcomes?’

She added: “We know that intermediation has increased since the MMR reforms.

“There are several theories as to why this may be and the impact it’s had so we will be looking to gather evidence throughout a number of questions.

“How has the MMR changed the market in terms of intermediation? Are there differences in the outcomes for consumers who have obtained their mortgages through brokers compared to those who go direct to lenders? And if so what drives those differences and is there room for improvement?”

The FCA will also ask whether tools available for consumers such as price comparison websites, best buy tables and advice, effectively meet their needs.

Jones said: “Here we will be considering whether there are distortions because of an undue focus on particular headlines or features.

“We will be considering whether there is suitable provision for specific consumer segments with less common needs or circumstances.

“For instance those without online access, those with greater levels of experience and understanding, lesser advice needs and older borrowers needing advice across a wider product range.”

Robert Sinclair, chief executive of the Association of Mortgage Intermediaries, who was chairing the theatre, questioned the necessity of the FCA’s new market study so soon after the Mortgage Market Review which hit the market in April 2014.

He said: “We’re still only really getting through some of the implementation stages of the Mortgage Market Review, which was a four year piece of work by the FSA, the FCA’s predecessor, to try to make sure the UK was in the right place from a regulatory controls perspective.”

Jones defended the study by saying the purpose isn’t necessarily a “radical rewriting of the rulebook”.

She added: “The timing following MMR means enough time has been imbedded that it’s right to do a bit of standing back – has this had any unintended consequences perhaps?

“Are there things we didn’t get right that we should be looking at again and looking at through the competition lens?

“[We’re] certainly very interested to hear your views about those questions as well.”