The Financial Conduct Authority's interim report on the mortgage market has been criticised for focusing on the price of loans over other features.
This morning (4 May) the regulator published its interim findings on the state of the mortgage market.
While it found high level of choice and consumer engagement, the regulator also said it would look at ways of making the mortgage market work better for those buying a property.
The FCA said it was concerned there is no easy way for a consumer to be confident, at an early stage, of the mortgage products for which they qualify which was a "significant impediment" to shopping around.
But Gemma Harle, managing director of Intrinsic’s mortgage network, said: "Throughout the paper the focus was on price and the tone suggests that cheaper is almost always better. This ignores some of the complexity of mortgages.
"Parts of the population, such as the growing self-employed population, need flexibility, which can come in a variety of forms. Recognising this and choosing an appropriate solution requires an expert."
Ms Harle said mortgage brokers should consider the use of online advice, with the report saying this may be one way of addressing the issues the FCA found.
The FCA also found a significant minority of customers - around 30 per cent - failed to find the cheapest mortgage for them.
And it found a number of longstanding customers - most of whom took out a mortgage before the financial crisis - would benefit from switching away from a reversion rate but could not, despite being up-to-date with payments.
Charles McDowell, Aldermore’s commercial director for mortgages, said consumers often fall victim to a lack of communication and an opacity of information.
"There needs to be better communication from both the broker and lender; however we recognise that the broker often has the deeper relationship with the borrower.
"There is a need to a strike a fine balance between risk and flexibility, and ultimately act in the consumers’ best interest.
"We have seen the likes of the self-employed struggle because they do not fit the norm, and the industry needs to consider consumers’ individual circumstances before refusing a remortgage application."
To address the issues it found, the FCA said it wants to make it easier for consumers, at an early stage, to identify for which mortgage products they qualify and removing barriers to innovation in the sale of mortgages.
This second point could involve changing the rules surrounding advice and guidance.
The FCA said it also wanted to make it easier for consumers to assess the strengths of different mortgage brokers. It said it would work with the broker sector to develop metrics to help consumers compare brokers.
Robert Sinclair, chief executive of the Association of Mortgage Intermediaries, welcomed this and said it would not be "beyond the wit of man" to come up with a process which achieved this.
He said: "Certainly we are happy to work with the FCA to look at the methods of delivery to do that.
"They have given a good ticket of health to the mortgage market. While there are issues, they are nowhere near as big as the issues they have found in other markets."
He added that he was also happy to work with the FCA on helping consumers shop around, but warned that complexity is often the price paid for greater innovation.
Mr Sinclair added: "Consumers are not always round pegs which fit into round holes."
Jackie Bennett, director of mortgages at UK Finance, said: "Today’s interim report highlights that, in the main, the mortgage market is working effectively for the vast majority of borrowers.
"The industry is committed to lending responsibly and ensuring that competition in the market works to the benefit of all customers.
"We note the FCA’s points regarding perceived areas of weaknesses within the market, particularly around customers who currently may be unable to switch products.
"We will be working through the FCA’s recommendations and continuing to engage closely with the regulator over the coming weeks as we respond to the consultation."
damian.fantato@ft.com
