Mortgage market study must focus on big picture, says Smee

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Mortgage market research is in danger of data overload

When the FCA announced the mortgage market study in December, we welcomed the constructive approach to view lenders’ practices and potential influences on customer outcomes. Four months on, at the data collection stage, there is growing concern that the study is lacking the focus needed to accomplish its goals.

The MMR in 2014 created a seismic shift in how mortgages are sold, so it is entirely right that the FCA reviews its effect. And it is better that it is looking at how distribution is working now, when things look benign, than in five years’ time after concluding that things have gone wrong.

It is helpful that the study will look at the whole range of players involved in the mortgage and house-buying process, and what drives and influences the products to which consumers have access.

However, the volume and variation of data currently being requested of lenders by different parts of the FCA feels excessive and possibly counterproductive to its aims – especially the requests around the market study.

The timescales are simply too tight for meaningful analysis and, while lenders had expectations of an onerous request for data, the scale still feels disproportionate.

Working towards finding out how borrowers can get the best deal is a worthy venture, but can the regulator find the right answers by overburdening lenders with requests for data? That killer piece of data that ensures all borrowers are driven to the best outcome simply does not exist. If it did, something would come along and move the goalposts anyway.

Micro-management of markets, even in the name of competition, does not usually work. It will be more constructive to stick to big themes and act only where palpable detriment is identified.

Paul Smee is director general of the Council of Mortgage Lenders