The FCA will investigate whether its rules around advice reduce competition in the market.
In a call for input on competition in the mortgage market, published this morning, the regulator recognised that where advice is lengthy and does not engage the customer, competition can suffer.
However, it did stress that its rules on advice “do not prescribe how and advised sale must be conducted or the length of time it must take”.
Since the Mortgage Market Review launched in April 2014, lenders’ advice processes have tended to be much lengthier than brokers’. Today’s feedback statement suggests the regulator could also look at whether its rules favour brokers over lenders and if that benefits the customer.
The FCA says it will look at its advice requirements as part of its market study on competition, the terms of reference for which will be announced before the end of the year.
Today’s feedback statement says: “As part of our general interest in the impact of regulation on financial services, we are keen to ensure that our rules work towards maximising the potential benefits that consumers can get from the advice process. In assessing whether that is the case, we are interested in the impact of our rules on specific types of consumers.
“We are also interested in assessing the impact of our rules on market dynamics more generally. We want to know whether, for example, the regulatory framework favours some distribution or business models to the detriment of others, and whether that is ultimately to the benefit of consumers.
“As part of this, we are also interested in whether our advice rules, which do not aim to differentiate between interactive channels, may have inadvertent impacts on innovation.”