FCA consults on competition in the mortgage sector

Nia Williams

October 7, 2015

The consultation provides an opportunity for interested parties to help the FCA identify potential areas where competition may not be working well and could be improved.

Commenting Christopher Woolard, director of strategy and competition at the FCA, said: “For millions of consumers a mortgage is one of the biggest, if not the biggest, financial transaction they will enter into in their lifetime.

“The mortgage sector also plays a vital role in the financial services industry and many areas of the economy.

“Competition can play a key role in ensuring that the sector works well, delivering consumer benefits through lower prices, better customer service, and more product choice.

“We are seeking stakeholders’ views on competition in the mortgage sector. These views, together with evidence from the FCA’s wider programme of work on mortgages, will help inform any future FCA work on this key sector of the economy, including any future competition market study.”

The FCA is interested in the range of factors that might affect competition in the provision of loans secured against a property, whether regulated or unregulated, including as a result of:

• The regulatory regime (including changes introduced following the Mortgage Market Review), and any other barriers to entry, expansion or innovation.

• Consumers’ ability to effectively access, assess and act on information about mortgage products and services; and

• Firms’ conduct and relationships.

These factors might be affected by changes in the economic environment and/or changes to the regulatory framework. The FCA would like opinion on how this should inform the scope and timing of any future market study or further FCA work.

The Council of Mortgage Lenders has welcomed the move, saying it is an excellent opportunity for the regulator to review the effect of regulation as well as market practice on lenders as well as their customers.

CML director general Paul Smee said: “The FCA’s role in promoting competitive markets is the part of regulation that best helps foster creativity, innovation and a sharp focus on what drives customers.

“It’s also essential in delivering the kind of environment in which reputable lenders of all shapes and sizes can thrive.

“We will be working with all our members to ensure that their perspectives are fully reflected as we work with the FCA on this vital issue.”

The Call for Inputs will close on 18 December 2015. An outline of responses received and a confirmation of whether it intends to take any further action will be set out in a feedback statement, to be published in the first quarter of 2016.

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