Judging by the nature of the questions being asked of key participants in the mortgage market and the ideas being expressed in recent speeches, the FCA seems keen to expand execution-only sales process, reversing much of the good brought about by MMR in 2014.
We can all agree that where customers have the ability to input facts into a search tool without any interaction, this is not giving advice. However, where they actually need help to establish the answers to interest type, term, amount, LTV etc., as has been indicated in recent consultation, then this should not really be deemed execution only.
Our view is that MMR has largely been successful in ensuring customers that require help are guided towards an advised sales process and these specific rules do not require intervention or weakening. In reality this is a significant portion of the market. The extent to which objective factors are permitted is an important boundary that will define the risks facing consumers in making poor choices. The use and potential proliferation of help boxes and ‘bots’ should be monitored and if significant should transfer the application towards an advised route.
It is significant that the FCA paper makes it permissible to differentially price execution only mortgages, which will give direct lenders an unfair competitive advantage over those using intermediary only distribution. This cannot be fair in a market place that has been served so diligently by intermediaries for decades. The FCA’s role is to promote a fair market that works for consumers and our anecdotal research suggests that interaction with a qualified human being is a vital element for building trust and peace of mind; technology solutions and a polarised market will not be a good thing for maintaining trust and therefore a confident market.
Intermediaries provide choice of provider and product through an advised process which delivers precise consumer recommendations. There is a suggestion that brokers will be unable to consolidate their fees on some remortgage business because of the changes in the affordability paper and we believe this is a negative step. The delivery of choice and advice which this consultation suggests will do much to restrict consumers who will likely be offered limited options by single providers with the promise of speed and simplicity.
It will be a false economy and highlights the lack of protections for consumers under this approach which must be better explained if the proposed rules and guidance are adopted.
Gavin Earnshaw, compliance director, HLPartnership