New plans could increase brokers’ online presence and widen their networks
The FCA’s plans to create a directory for mortgage brokers have been broadly welcomed by brokers, who hope the new tool will increase their visibility online and provide a source of new business leads.
However, experts warn that the fairness and effectiveness of the directory will depend on how its search filters work in practice.
The FCA’s Mortgage Market Study confirmed that the directory will be voluntary and that the tool will be created by the Single Financial Guidance Body – or the Money and Pensions Service, as it is now known.
It has not yet been decided how firms will be ranked in the list – whether it is by proximity to the customer’s own postcode, alphabetical order, adviser specialism, or other qualitative factors. Perhaps customers will be able to select different filtering options according to their own priorities. It is unclear how telephone and internet-based firms will be displayed, should geographical filters apply.
Putting aside concerns over ranking order, brokers will be paying for the new directory through their standard regulatory fees anyway, so many say that listing on the directory is a no-brainer as it is likely to provide a source of new business enquiries.
Advisers also seem unfazed by proposals to show how many lenders they habitually use.
Bespoke Finance founder Adam Hosker says: “The report shows brokers who use the same lenders have bad consumer outcomes. Listing the broker’s lender spread as part of the proposed directory will help consumers.”
He adds that depending on how these listings are displayed, mortgage advisers in the north may find themselves in high demand once consumers can compare fees charged by their counterparts in the south east on the new directory.
Ash-Ridge Private Finance mortgage consultant Jane King also believes the new directory will be a boon for firms like hers.
She says: “I am absolutely thrilled because I am hoping people will actually use the directory. It will be great for brokers like me who do not charge fees.”
But she adds: “The big networks should not be allowed to take over. I hope the FCA makes sure it is completely unbiased.”
Other industry voices gave the proposals a cautious welcome.
Thistle Dhu consultant and former FCA director Lynda Blackwell says: “I think the directory is a positive move. As long ago as 2010, one of the first things the Mortgage Market Review proposed was that we needed some way to deal with the rogues in the market.
“This goes some way towards helping with that. It does leave a lot to the firms themselves to ensure that the fitness and propriety of the brokers work for them.”
She adds that the effectiveness of the directory will depend on how well it is policed and what resources are devoted to checking that it is accurate.
But the new directory is bound to be more controversial for businesses already providing alternative adviser search tools, despite the FCA’s reassurances they will not be “unduly disadvantaged”.
Unbiased has been offering a “find an adviser” service for 30 years, which started as a telephone hotline in the days before widespread internet use.
Its chief executive Karen Barrett says: “Generally we welcome any initiatives that improve consumer outcomes. But I am not quite sure what problem the FCA is trying to solve here.
“They are obsessed with consumers being able to choose, identify and compare but I would challenge whether consumers want that. What you may have then is a paradox of choice.
“We have seen this with the Money Advice Service retirement adviser directory. I would challenge how successful that is. It has not got all advisers listed and it is a bit old school.”
She adds: “A directory feels a bit like Yellow Pages. In this day and age, I am not sure that it really cuts it for consumers and their needs. I believe consumers want a curated choice.”
But rival service VouchedFor is more positive about the new tool.
Its chief marketing officer Alex Whitson says: “The FCA and SFGB will be leveraging their authority to massively enrich the amount of information available to consumers, while supporting private sector innovation that will help deliver the greatest breadth and quality of user experiences to different audiences.
“I would like to see a set of standards produced and monitored for directories – to help ensure the best possible consumer outcomes.”
Others stressed the importance of a collaborative approach from industry players.
Primis chief operating officer Toni Smith says: “I would be really keen that the networks work together rather than competing with each other to ensure that we are all presenting a fair set of information.”
The new Money and Pensions Service will be consulting further with the industry on details of the new directory this year.