Mortgage market ‘will have to adapt to OFT findings’
Despite focusing on credit card default charges, the statement by the OFT said that the principles could also be applied to default charges in other consumer contracts, including mortgage loans.
The OFT has set out a 31 May deadline for the financial sector to respond to the statement, and John Fingleton, chief executive of the OFT, said: “Our threshold approach is a spur to changes in market practice.” He added: “We have not ruled out future legal action if the market does not respond positively.”
Matt Grayson, head of PR at BM Solutions, suggested the OFT study should not have too much of an impact on the regulated mortgage market. He argued: “The study seems to be quite focused on the overdraft and credit side of finances.”
He believed the market had nothing to fear, due to the impact of regulation. “As we work in a regulated market, all of the potential costs and fees are stated to customers so they know what they are getting and the costs reflect what the lenders have to do. The costs for comparisons among lenders are very competitive and there is no room for complacency in the marketplace,” he added.
Richard Sexton, business development director at e.surv, admitted that he had seen credit card companies move to change their propositions over the past two years to change their market hold. He said: “A number of credit card companies have bought small brokerages. As credit cards are unsecured loans, a lot of them have set up secured loan brokerages, so the customer is captured, moving from unsecured to secured lending to sort their finances out.”