‘I certainly believe the mortgage market has shown its resilience’

“One of the things I would say, in terms of the mortgage market, is that you think you’ve seen everything, and then something else will come along that we’ve not seen before.”

Besides a pandemic that introduced furlough and blanket payment deferrals, and a financial crisis that saw house prices fall and repossessions rise, Roe recalls self-certified mortgages that would be unimaginable today.

“In this day and age you would think, what would possess anybody to grant a loan to somebody on a self-certified mortgage? ‘I can’t provide you with a payslip, but I promise you I’m earning £180,000 a year.’

“It doesn’t make sense. When you look back now, you think, how did that happen?”

They used to call it ‘jingle mail’. In the morning, the bank would get a number of envelopes with just keys put in there

Among 15 priority areas that include sustainability and cladding, Roe – who leads UK Finance’s mortgage policy development – says the biggest area in which the trade body is currently involved is working with its membership of 150 lenders to support borrowers during the cost of living crisis.

While today lenders have various support packages that can be tailored to borrowers' circumstances, Roe describes how the situation was very different 40 years ago.

“Going back to the 80s and 90s, when there was a house price crash, lenders didn’t have the support, the infrastructure in place, to be able to help those homeowners. 

“And what people used to do, they used to call it ‘jingle mail’. In the morning, the bank would get a number of envelopes with just keys put in there, with people saying ‘please take my property back, I can’t afford it anymore’.

“We’ve evolved, we’ve developed over time. So these things, they’re unique and so I think as they say, if it doesn’t kill you, it makes you stronger. And I certainly believe in terms of the mortgage market, it has shown its resilience.”

Indeed, the trade body recently responded to the FCA’s draft guidance for lenders on supporting borrowers impacted by the rising cost of living, says Roe, who held five different roles while he worked at the regulator.

“The FCA is a unique organisation to work for. It gives you a real insight into firms, business models [and] the different challenges the regulator faces, in terms of where it can divert its limited resource to.

“The bit that I enjoyed most about the regulator was the engagement with firms and seeing the outcomes, which were generally in terms of the consumer getting a better outcome come into reality, based on the regulation that we’d put in place.”

The upcoming consumer duty would be such an example, although Roe says there is nothing that the duty can be compared to.

“There’s nothing we can refer back to and say, ‘this is what we did last time’. The closest we have is the FCA’s Treating Customers Fairly initiative, which came out in the early to mid-2000s. This is more than that.”

Consumer duty and product value

Once lenders start implementing the consumer duty, one outcome that advisers can expect to see is a product value document, according to Roe.

“One of the things that we’re working on at the moment with our colleagues at the Association of Mortgage Intermediaries, the Building Societies Association and IMLA, is a product value document.

“So this will be a document that all products, providers and manufacturers will use that will just explain to the broker community, the distribution network, how that product represents value for the intended target audience, and who that audience is.

Mortgage lenders work very closely with the mortgage brokers; neither could survive without the other.

“We will see lenders start to ask the distributors for more information around things like complaints.

“They’ll be asking for more information around their levels of commission so that those manufacturers, when they’re looking at that product value chain can make sure that – whether it’s commissions, the fees that are being charged – throughout the chain represent good value for borrowers.”

As Roe puts it, lenders work very closely with brokers, and “neither could survive without the other”.

So in addition to working with lenders at UK Finance, Roe says he is fortunate in being able to see both ends of the market as a non-executive director of the broker network Stonebridge as well.

“I get to see the product development, the challenges that the large lenders have; but also I get to see the sales side as well. And making sure that those customers get a good outcome, and understanding issues that we face in terms of complaints right at the grassroots.”

We don’t want retrospective regulatory approaches.

One concern that Roe has regarding the consumer duty however, is the possibility of a grey area existing between now and July.

“[A] concern I have is that in hindsight if customers complain, we find that actually what happens there is that firms, in this intervening period between the consumer duty being announced and the implementation period, that actually there’s this little grey area [where] the rules weren’t in place until July, but actually firms should have been mindful of [them] when they’re dealing with complaints, or when they’re developing products.

“We don’t want retrospective regulatory approaches.”

‘Greening’ UK homes

Aside from the consumer duty, Roe says another concern lies in relation to the green agenda.

“We’ve come up with a number of recommendations to the government in terms of things that we would like to see it take forward, in relation to enabling homeowners and landlords to improve the energy efficiency of their homes,” he says, referring to UK Finance’s report on net-zero homes published in November.

“So one of the big concerns is, where do homeowners turn to to get independent trusted advice to find out what the best energy efficiency measures are to put into their homes to try and improve energy performance, or to cut down on heat loss, without it becoming a cowboy’s charter.”

Describing the home as the biggest asset that people buy, Roe agrees that the role of a mortgage lender has changed beyond lending people money to buy a home.

“[Buying a home] remains a great aspiration for many people. When you’ve got your home, what you want to do is, you want to make sure that it’s affordable, it’s safe and it’s warm – it’s a place to live in.

“And I think from the point of view of a mortgage lender, yes that role has changed, because you want to make sure that the asset that you are enabling that homeowner to buy is something that they will look after, they will invest in for the future, and they will see their investment grow over time.

“When I’m talking about their investment, I’m talking about upgrading it, making sure that it’s warm. But we all have a part to play in terms of ensuring that as a UK, we achieve our net-zero targets by 2050.”

Chloe Cheung is a senior features writer at FTAdviser