The FCA’s decision that the mortgage market needs further regulatory attention says a lot about the journey we are on. The fact that, following the crisis, it is not yet a properly functioning market appears not to be anyone’s fault: not the FCA, the Prudential Regulation Authority or the lenders, and with Help to Buy and quantitative easing, the Treasury and the Bank of England seem to be off the hook too.
That only leaves the inconvenient intermediary. Broker firms are the propeller of competition: the consumer’s friend, the lender’s conscience. However, according to the latest FCA studies, lenders are complaining that brokers make unreasonable demands in commercial negotiations. Call me old fashioned but if you go to a dance, you might be expected to throw some shapes.
In opening up their products to intermediaries, lenders have choices to make and conflicts of interest to manage. Complaining to the regulator that some brokers have got a bit powerful is a bit like saying you do not like the tango or quickstep.
How that comes to be the fault of the band, your dance partner or the venue is just plain daft. With a history of not using transitional arrangements fully, hiding profit in valuation fees, not allowing customers to port their mortgage and levying large early repayment charges in the final months of loans, some of those complaining need to have a hard look in the mirror.
Lenders have total control over who they lend to and the nature of any contracts they execute. Consumers choose brokers as they understand the complexities lenders create. Consumers choose to come to brokers as they provide choice and value in a free market. Perhaps a lender foxtrot is the answer.
Robert Sinclair is chief executive at the Association of Mortgage Intermediaries