Lenders accuse FCA of pulling back from MMR

Search supported by
Lenders accuse FCA of pulling back from MMR

Lenders have questioned whether the regulator is pulling back from the measures it introduced as part of the Mortgage Market Review (MMR).

Speaking at the Financial Services Expo (FSE) Manchester yesterday (17 May), a panel of lender representatives discussed the Financial Conduct Authority's (FCA) interim report on the mortgage market and whether it suggested the regulator was rolling back from the MMR.

At the start of this month the FCA's interim report identified a range of potential ways to make the mortgage market work better for consumers. 

These measures include the watchdog removing barriers to innovation in the sale of mortgages, including those due to aspects of FCA advice rules and guidance.

The FCA is also looking at ways to make it easier for consumers to assess the strengths of different mortgage brokers. 

The regulator intends to work with the broker sector to develop metrics to help consumers compare brokers.

Dave Rogers, intermediary partnership director at Barclays, was first to question whether the report signaled a different approach from the regulator.

The Mortgage Market Review, which came into force in 2014, stated customers needed to satisfy lenders that they can afford the mortgage and provide evidence of income in all cases.

The MMR required most interactive sales (for example face to face and telephone) to be advised, unless the customer is a mortgage professional, a high net worth mortgage customer or a business borrower; and non-advised sales were banned.

He said: "In terms of the overall report, I don't think there is anything for the industry to worry about but it seems to be a bit of back-tracking on the Mortgage Market Review in terms of its view on price."

The comments followed a heated session with the FCA when a stream of delegates questioned representatives from the regulator on whether its research on the potential cost-savings for borrowers not on the cheapest rate was valid.

Ian Andrews, managing director for intermediary sales at the Nationwide, said although he welcomed the report's view that intermediaries are not biased towards products that pay a higher procuration fee, he also questioned what the interim report meant in terms of the Mortgage Market Review.

He said: "Has the FCA softened on the MMR idea that everyone needs advice?"

Mr Andrews also said he "couldn’t get his head around" the potential 'Trip Adviser for clients' idea the FCA was positing, which would allow individuals to compare different brokers and intermediaries.

This comes as the regulator earlier said it would like to work with the industry to establish what type of metrics it could use in a broker-comparison tool.

Charles McDowell, commercial director at Aldermore, also questioned how the theoretical measures outlined in the report would be put into practice.

However, he did welcome the report overall and said it was a fairly strong ringing endorsement and that it "could have been much, much worse" for the industry.

The FCA has been asked to comment.