FCA report eyes mortgage prisoners and broker comparison tool

The Financial Conduct Authority has singled out mortgage prisoners, shopping around and a broker comparison service as areas of the market that need change.

The FCA made the statements today in its interim report into mortgage market competition, first mooted in 2015.

The report says a third of consumers fail to find the cheapest mortgage deal, but the sector still works well for most people. The FCA believes there are overall high levels of choice and consumer engagement.

It adds that there is little evidence mortgage firms’ current commercial arrangements lead to poor outcomes.

However, the regulator says there is no easy way for consumers to know which mortgages they qualify for at an early stage, which hinders shopping around.

The FCA adds that mortgage prisoners are an ongoing problem.

The financial watchdog says it has found ways to make the market work better for borrowers and will push these.

These include finding ways to make it easier for consumers to shop around earlier in the mortgage process.

These also include drawing up metrics to help consumers compare mortgage brokers. The regulator says it will work with brokers on this.

The FCA also wants to help mortgage prisoners by exploring possible solutions.

An FCA statement says: “The FCA intends to explore options to help these customers, for example an industry-wide agreement to approve applications for a new mortgage deal from existing customers whose most recent mortgage was taken out before the financial crisis and who are up-to-date with payments.”

Additionally, the regulator says it will remove barriers to innovation in mortgage sales, including changing its own advice and guidance.

The regulator will put out a full report by the end of the year.

FCA executive director of strategy and competition Christopher Woolard says: “The mortgage market is one of the largest financial markets in the UK and there have been significant changes to the market since the financial crisis in order to ensure that we do not return to the poor practices of the past.

“For many the market is working well with high levels of consumer engagement. However, we believe that things could work better with more innovative tools to help consumers.”

The FCA has shown an interest in mortgage competition since March 2015, when it published its 2015/16 business plan.

The plan said the regulator wanted to check barriers to competition in the mortgage sector.

In December 2016 the FCA formally launched its market study into the issue.

The study looked at whether commercial arrangements between lenders, brokers and other players lead to conflicts of interest or “misaligned incentives” that harm consumers.
It also investigated if consumers can make “effective decisions” at each stage of the buying process, and how tools and advice affect this.

The regulator wanted to publish an interim report in the Summer of 2017 and the full report in early 2018.

However, the timeline got dragged out because the project had created more work than the FCA had predicted.

More to follow.



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  • Freddie Fudpucker 4th May 2018 at 2:22 pm

    Interesting that the FCA ( and certainly the BOE ) do not give a damn about savers getting screwed at every opportunity for the past 10 years !

  • Simon Wilkinson 4th May 2018 at 2:01 pm

    Carl is spot on. The cheapest car, the cheapest shoes, the cheapest partner! A mortgage is no different. Circumstances and specific requirements will ultimately dictate the lender and product. Presumably we should all recommend Variable rates as they are the “cheapest”….

  • Carl McGovern 4th May 2018 at 7:33 am

    Its a sweeping statement to make that a third of consumers fail to find the cheapest deal! How can anyone make that statement when a clients circumstances may well dictate that the cheapest deal from them, may well not be the cheapest deal in the market? Plenty of people have complex situations and not everyone, who walks into a brokers office, has the Income, credit rating and financial profile to fit ever lender out there. If it as simple as that then fine, but in the real world, it simply isn’t.

    • Sam Barker 4th May 2018 at 7:37 am

      And of course the absolute cheapest deal might not be best in any case… stay tuned Carl, we are speaking to the FCA later so will ask about this and publish more stories.