The Financial Conduct Authority has reassured the industry that its upcoming mortgage market study is unlikely to result in “wholesale change” of the scale of the Mortgage Market Review (MMR) reforms.
Speaking at the Financial Services Expo in London today (14 September), FCA director of competition Deb Jones said the terms of reference, which are due to be released before the end of the year, would focus on consumer outcomes.
Ms Jones said the regulator was not “looking to tear everything up”, adding that the FCA’s aim was “to create the conditions for a healthy competitive process and then let that process run”.
She said the initial call for feedback had elicited “a fear that this market study might lead to another wholesale change in the way the mortgage market is regulated”, at a time when some of the MRM reforms were still being implemented.
But Ms Jones sought to dampen these fears by pointing to similar FCA market studies on credit cards and cash accounts, which “had not resulted in a radical re-writing of the rule book.”
Speaking to FTAdviser, she clarified that the FCA was “not setting out for a wholesale change for the way the sector is regulated”. However, she stressed that the final outcome would depend upon the findings.
Ms Jones said the the role of intermediaries - which had increased since MMR - would be a major focus of the market study.
It was investigating the impact of increased intermediation in the market on consumer outcomes; how increased intermediation since MMR impacted the market generally; and whether there were any differences between consumer outcomes for those choosing to use an intermediary compared to those who go direct.
It would also investigate whether commercial agreements between providers and brokers had the potential for a conflict of interest that could impact on consumers, as well as whether such agreements were setting up barriers to entry for new market players.
The study would also assess whether tools currently available to help consumers make their mortgage choices were meeting their needs effectively.
Alice Douglass, an independent financial adviser with Grosvenor Consultancy, said she was confident the FCA would find that intermediaries in general improve consumer outcomes.
“Unless you have done a lot of swatting up on mortgages, you’re likely to know less than a mortgage adviser,” she said.
She said more regulation - especially when MMR had “barely touched the ground” - had positives and negatives.
“You don’t want people out there ruining the reputation of the mortgage advice industry. But then again I’ve never met any adivsers who don’t have their customers’ interests at heart.”