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FCA must back ‘digital mortgage market’

Ryan Bembridge

December 21, 2015

The Council of Mortgage Lenders has urged the Financial Conduct Authority to back the creation of a ‘digital mortgage market’ to increase competition in the sector.

With consumers keen to transact business online, the CML said competition could be improved by ensuring that online channels can compete with face-to-face business.

The trade body also called for deregulation of the market as a whole, which has been swamped with new rules over the past year.

In April 2015 the market had to adopt the Mortgage Market Review which introduced mortgage stress testing, while in March 2016 the market will have to adopt the Mortgage Credit Directive which will see second charges and ‘consumer buy-to-let’ come under FCA regulation.

The CML was responding to the regulator’s ‘Call for Inputs on competition in the mortgage sector’ released in October which asked for the industry’s views on improving competition in the mortgage market.

Paul Smee, CML director general, said: “Overall, we think the UK mortgage market is actually very competitive – as thousands of mortgage products from well over a hundred lenders testify. Yet, in recent years, lenders have had to focus a lot of their resources on implementing the changes flowing from new regulation. To help the market grow in competitive terms from here, it needs a period without too much further regulatory intervention.

“That said, there are some areas where modest deregulation – or, at least, permissive clarity from regulators on areas where taking a liberal interpretation currently feels like a risk to lenders – might help. Examples include the rules on assessing affordability when lending to borrowers whose loans will extend into retirement, as well as ensuring that the rules on mortgage sales and advice are fit for purpose in a digital age.”


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