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FCA: Lenders could sideline traditional brokers


The FCA says it expects technology changes to cause lenders to rely less on traditional mortgage brokers in the future.

The regulator makes the prediction in its ‘sector views’ document, published alongside its 2018/19 business plan today.

The document says: “PSD2 and Open Banking are likely to accelerate the digital transformation of retail lending business models.

“As a result, new technology-driven firms entering the market are likely to compete for market share in a range of markets, but particularly mortgage intermediation and credit broking. We also expect technological developments to lead to mortgage firms reducing their reliance on traditional mortgage brokers.”

An FCA spokeswoman confirmed that “mortgage firms” means mortgage lenders in this case.

The FCA expects most near-term mortgage growth to be driven by first-time buyers and remortgaging.

The regulator also predicts more mortgage product innovation to meet social changes.

It says: “We expect more firms to respond to changes in the socio-economic environment by developing products in the short to medium term for consumers on zero-hour contracts, older borrowers, and the very-recently self-employed within the framework of our existing affordability requirements.”

The FCA adds that it has already seen the mortgage market “growing to meet cross-generational needs, as some younger consumers seek to purchase their first property and those in later life look to release equity”.



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