Industry responds to FCA competition review details

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The mortgage market has broadly welcomed the details of the Financial Conduct Authority market study into mortgage competition.

The market study, published earlier today, aims to find out if competition in the mortgage market can be improved to help consumers.

The Association of Mortgage Intermediaries says it is pleased the FCA has refined the scope of the study since the feedback statement in May.

An Ami statement says: “Ami remains wary of those who argue that the regulatory demands stifle innovation, whereas we see them as necessary to ensure the best consumer outcomes.”

Ami chief executive Robert Sinclair says: “We strongly support the restriction to the first charge residential market and the inclusion in scope of internal product switching. We are hopeful that this review will size and assess the extent of execution only in product switching and whether this might harm consumers in a rising rate environment.”

Sinclair adds that the FCA’s decision to look at how consumers get information through best buy tables and price comparison websites is a good one.

He adds: “In addition, ensuring there are no soft inducements in the areas of PCWs and even in sourcing systems will ensure that the market is robust.”

Sinclair says that Ami supports the FCA looking into panel arrangements and the impact of similar restrictions, “particularly where it is a panel of one”.

He adds: “Whilst we do not feel that the current procuration fee payments influence broker advice due to the relatively small differentiations between lenders, it is positive that this will be reviewed. However it is hoped that the team will look at this as having elements of costs substitution in the chain and is not a pure added cost.”

The Council of Mortgage Lenders says it is helpful the FCA is looking at all players involved in mortgage and house-buying processes, as well as technology.

A CML statement says: “It is important to understand what drives and influences the products that consumers have access to and ultimately choose. A clear understanding can only be good for the customer interest.”

CML director general Paul Smee says: “The FCA’s rule changes in 2014 created a seismic shift in how mortgages are sold. It is entirely right that the regulator reviews their effect, as well as how commercial relationships in the market have developed in the light of the new environment.”

The Building Societies Association says the regulator has listened to the concerns of the market before bringing out the market study.

BSA chief executive Robin Fieth says: “Buying a home remains the single biggest financial transaction that most people ever undertake. Ensuring they get the right product for their needs is critical.

“Now is the right time to take stock of the effect that the multiplicity of new rules are having on this highly regulated market; how these rules have impacted consumer and market behaviours and outcomes.”