The FCA’s ongoing Mortgage Competition Review is likely to cover off lenders’ relationships with networks and some other key areas such as free legal offers for remortgage clients, according to a panel of experts.
Speaking at today’s Financial Services Expo Wales, John Coffield of Paradigm Mortgage Services said that while he believed there was plenty of competition in the mortgage market, the regulator would be highlighting a number of areas.
Coffield said: “The regulator should look closely at those networks who offer limited panels and why they choose the lenders they do to be on it. They should be making sure that there is no ‘pay to play’ element when it comes to these arrangements.”
Adrian Moloney of OneSavings Bank highlighted the significant press coverage recently on the issue of free legals, and the concerns raised by advisers about the quality of the service clients were receiving. “There has been a lot of press coverage on this very issue and the big question is whether they are actually good for remortgage customers,” he said.
The panellists also highlighted the forthcoming changes to buy-to-let underwriting – in terms of the new requirements for lenders regarding portfolio landlords – as one area which was likely to change the way advisers had to work.
“The buy-to-let market is currently split into two camps – vanilla and more complex,” said Moloney. “It’s going to get more complex from the 1st October and lenders are going to need more detail from clients. I think lenders will look at validation tools that validate the portfolio in the background; those lenders who can do this will be the winners. Those lenders who have more automated systems will find it more difficult.”
Ian Carswell of BM Solutions agreed that the complexity of the market will only increase.
“The buy-to-let market is now far more complex and brokers have far more complex products to choose,” he said.
“That’s not making the job any easier for advisers but that doesn’t mean they should be shying away from it. The market is definitely more challenging; there is however a vast market in terms of buy-to-let product transfers that’s currently untapped from an intermediary perspective. Product transfers are undoubtedly a business opportunity for advisers.”