Despite rumours of upturn in activity, all the signs show us that the mortgage market remains in the doldrums. But, while we don’t know how long this will last, we do know that it won’t be for ever.
With this in mind, we are looking ahead to the future. When things eventually improve we want the mortgage market to work more effectively than it has in the recent past.
This is why, as we said in our recent business plan for the coming financial year, we are carrying out a review of the market and how we regulate it.
The review covers the whole of the market – lenders, brokers and consumers – and it covers all aspects of regulation.
We are asking how the market effectively for consumers, and to ensure stability, competition and innovation.
And we are looking at what aspects of our regulation need to change to allow that to happen.
This review will go hand-in-hand with our other work, such as making sure firms are effectively managed and treat customers fairly, to help us meet the outcomes we want for consumers, i.e. for them to have access to products that meet their needs and receive good quality advice.
We know to achieve these outcomes we have to have a market that is sustainable for everyone – one that is flexible and focussed on what works for consumers.
Our mortgage conference on May 12 will look at this in more detail.
Alongside our review, we continue with our project work and treating customers fairly assessments of brokers.
And we are stepping up our work to stamp out mortgage fraud, building on the success we had last year in bringing offenders to book. This year we’ve already seen one broker jailed, one fined and four others banned.
Another priority for us this year is to begin regulating sale-and-rent-back schemes.
If you haven’t heard about rent-back schemes, they involve individuals selling their home, usually at a discount, and obtaining an agreement to remain in the property for a set period – typically through an assured shorthold tenancy of six to 12 months.
As you can imagine, consumers can be at great risk if they deal with unscrupulous firms, as the Office of Fair Trading found last year in its review of the rent-back market.
In the worst cases some rent-back firms may mislead customers regarding the value of their property or the security they have as tenants.
This includes telling individuals that they will be able to stay in their home for years, when in reality the tenancy may only be guaranteed for a far shorter period.
And there are examples of firms imposing substantial rent increases or even evicting tenants after a short tenancy period.
This is why we are working fast to start our regulation of rent-back firms, which will begin on an interim basis this July, ahead of full regulation next year.
We aim to ensure that customers using rent-back schemes are treated fairly and we will be focussing on identifying companies that don’t do this as quickly as possible through our interim supervision regime and when businesses apply to us for full authorisation.