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Flurry of FCA updates to impact market

FCA logo 480Regulator unveils proposed directory of senior financial services professionals, publishes fees for 2018/19 and approves new tech-based mortgage firms.

The Financial Conduct Authority published a raft of reports, consultations and policy initiatives over the past month and many will have a direct impact on the mortgage sector.

Recently, the FCA has put forward plans to include mortgage advisers in a new directory of senior representatives working in the financial services industry.

It claims this will enable consumers to shop around more effectively, by helping them check the status and history of those working in financial services, including the mortgage sector.

Elsewhere, the FCA has also published the final details of the regulatory fees that advisers will have to pay for 2018/19.

The documents show that mortgage advisers will see this levy – which covers the cost of running the FCA, the Financial Ombudsman and the Money Advice Service – increase by 3.8 per cent this year.

This followed on from earlier draft proposals published in April, although the FCA did note that feedback from the industry on these earlier proposals had been muted.

Looking specifically at the mortgage sector, the FCA has also approved two new tech-based mortgage firms. These companies successfully tested out their business applications with consumers in the fourth cohort of the FCA’s regulatory sandbox.

The approved firms are Dashly, which describes itself as a “fully autonomous ‘always-on’ mortgage advice platform”. It has also approved Mortgage Kart, which offers an “automated-advice service” helping customers select a suitable mortgage.

The FCA also asked for responses to its joint discussion paper, looking at how financial companies can improve “operational resilience” and safeguard customers in the face of cyber-attack or computer meltdown.

In addition, the Mortgages Market Study interim report was published in May. The regulator is inviting comments on its findings by the end of July.

Of key concern to many brokers will be the regulator’s comment that “cheaper mortgage products were available” on almost a third of intermediated transactions.

This flurry of activity may be partly due to the time of year, with the regulator looking to get promised consultation documents out ahead of the summer break.

While there is a lot of new information for the industry to digest, London & Country’s associate director David Hollingworth feels that it is all necessary.“The breadth of the topics covered here is wide, whether it’s the next round of sandbox or a new directory for financial services workers.

“This demonstrates the wide-ranging strings of work that the regulator undertakes.”

He says it’s necessary for the regulator to spearhead policy initiatives like considering the impact of a cyberattack. “If the FCA didn’t initiate such discussions around stability they would certainly be in the firing line.”

Hollingworth points out that while the focus of this initiative may be on large lenders and banks, it’s important that this prompts similar discussions within smaller businesses in the sector. He adds: “There is a lot for advisers and firms to take in, particularly on top of the recent Mortgages Market Study.

“This all underlines the importance of the work that trade bodies like the Association of Mortgage Intermediaries do in sifting through these policy documents and helping firms get to grips with the issues that are relevant and significant to them.”

Adam HoskerBut some brokers are concerned about what these various initiatives reveal of the regulator’s approach to the mortgage industry.Bespoke Finance founder Adam Hosker says: “I think the current FCA papers show a desire to open up execution-only to give robo-advisers an easier time.

“Reading between the lines it seems the regulator wants to shift back market share away from advised and towards consumers selecting their own mortgage products. I don’t think many advisers think that this is the right direction the regulator should
be taking.”

However, others have welcomed this renewed attention, claiming it should drive up standards across the industry.

London Money director Stewart-Martin-London-Money-2016-CUTMartin Stewart says: “It is great to see the regulator increase activity in the mortgage market, as I’ve often felt we were seen as the poor relation compared to our IFA friends.”

He adds: “Some of these initiatives will be good for consumers, which will always be the regulator’s main remit, and rightly so.”

But Stewart says that while these broadbrush policy initiatives are to be welcomed, he would like to see the regulator embark on a more focused review of specific practices within the mortgage market. He says: “I maintain there is further work the regulator can do to help bring competition into the industry itself, by helping to break up the current favourable deals that exist, as well as the obsession with brokers having to use mortgage clubs.

“It is equally as important for the FCA to review the internal workings of the industry as understand how it is perceived by consumers.”


Andrew Montlake-Coreco

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