FSE Manchester: FCA defends mortgage market study

Michael Lloyd

May 17, 2018

The Financial Conduct Authority has defended its interim mortgage market study after the regulator was accused of overly fixating on cost.

Speaking at FSE Manchester, Graeme McLean, head of banking, lending and distribution at FCA, recognised that it focused on price.

But he said: “We’ve done past reports covering other aspects of the market such as affordability.

“If we are going to generally review what we’ve done in the past we have to unpick some of that if it leads to outcomes that can be improved.”

After being accused of not taking service levels into account, Mathew Ward, competition director at the FCA, said that there is a lack of data on service levels.

He added: “That’s difficult to assess what we’ve done. We can compare the outcomes for different customers.

“For a first-time buyer or a homemover, speed is more important than a remortgage customer. You risk losing the property. What I’m saying is there is a whole host of factors.”

One of these other factors is criteria, which Nicola Firth, chief executive of Knowledge Bank, highlighted the significance of.

She said: “A key objective of the FCA was to ‘make it easier for intermediaries to identify mortgages early on that consumers can qualify for’.

“The most fundamental part of that is being able to identify the criteria that each lender will accept. Brokers need to be able to do this even before searching for product. This is where criteria search systems come into their own.

“There are more than 50,000 different criteria on Knowledge Bank so it’s impossible for brokers to keep all of this in their heads.

“Fortunately Knowledge Bank is helping to meet that FCA requirement as brokers can now search this criteria in seconds, often finding solutions and lenders they would never have been aware of before.”

The full mortgage market study report will be released around the end of the year.

McLean said that the study has found 30% of borrowers could make substantial savings and that the FCA will work with consumer groups to help deliver the four areas of improvement.

These are: to make it easier for consumers and intermediaries to identify mortgages early on that consumers can qualify for; encouraging innovation in how consumers are supported during the mortgage buying process, for example, advice standards may need to change to encourage innovation.

Other areas it highlighted were tools to identify and choose intermediaries in a better way; and taking steps to help those switching to a better deal who cannot do so.

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