I was interested to read last week the Financial Services Authority’s proposals on distribution as part of the Mortgage Market Review.
It called for new labels to describe a firm’s service as either restricted or independent, the axing of the Initial Disclosure Document and the requirement that firms disclose to customers whether they will consider deals that can only be obtained direct from lenders.
But whole-of-market should mean precisely that. Direct deals should be available via all distribution channels, thus creating a level playing field for consumers.
Different distribution channels only succeed in mystifying the market and is not treating consumers fairly.
And while the FSA may say that there will be no requirement to issue an IDD, I will continue to do so. With European regulation due to kick in next year with its own disclosure document, I wonder how long it will be before this supercedes what the FSA is asking for anyway.
Perhaps the EU will come up with a disclosure document that consumers must sign to prove they have received, and more importantly, understood what they’re signing up to and the same with the mortgage offer too.
When eventually the housing market recovers direct channels for mortgages will not be able to cope.
The mortgage desks at branches would collapse under the weight of applications that they could not service properly.
Surely the authorities should now look at the mortgage market with a view to making it a level playing field.
There seems to be lots of smoke and mirrors from the MMR. And if at the end nothing has changed with regard to regulation, will the FSA justify the costs?
One conclusion is that the FSA seems not to have properly understood the industry and so is not fit for purpose.