FCA to study headline mortgage offers and commercial arrangements

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Headline mortgage offers and commercial arrangements between various factions in the industry are to be analysed by the Financial Conduct Authority as part of its study into competition in the sector.

Speaking at Imperial College Business School on Wednesday, FCA executive director Christopher Woolard said firms may exploit the difficulties that consumers have in making the right choices when choosing a mortgage.

“Across financial services we can see situations in which there is a choice of brands and superficial competition, but sometimes limited competition on price, quality or service under the surface,” said Woolard.

“We want to consider whether there may be any distortions caused by an undue focus on certain headline charges or features.”

He said the authority will also be working with the Competition and Markets Authority, who revealed last week that they will initiate a market study looking specifically at price comparison websites and apps.

Woolard also highlighted the commercial arrangements between various factions in the mortgage sector, saying these would be analysed.

“The relationships between brokers, lenders, panels, price comparison websites – even some estate agents and builders – exist for a reason. For many, it is the management of commercial or regulatory risk,” said Woolard.

“However, some of these relationships may be detrimental to the overall good-functioning of the mortgage market, or to the interests of consumers. We want to understand in more detail the competition dynamics in this space.”

He added that in broader terms, the study would be a means of reviewing the impact of the MMR as a whole and said he did not envisage “wholesale change”.

The findings of the study will be revealed in the coming months.