Stephen Smith: Respond to FCA’s call for input

MS StephenSmithbigger

We must not miss opportunities to shape and improve our industry, especially when the regulator is seeking our opinion

In October, the FCA launched a call for inputs on competition in the mortgage sector. It wants to see if there are any barriers to competition and whether there are areas where it could be improved in the interests of consumers. The consultation period will end on 18 December.

The FCA’s examination of the mortgage market in this way does not seem to be due to any evidence of problems. Instead, it seems more to do with the important role that mortgage credit plays in the UK economy and for financial services, as well as the importance of mortgage borrowing to consumers.

The level of competition between lenders today is encouraging. We are seeing a regular flow of new players into the market, often with plans to cater for specific underserved market sectors, while the mainstream names are highly competitive on price for the mass market.

Looking at the comparative statistics, the share of lending taken by the top six is pretty much back to what it was in the pre-crash days – well down from the dark days of 2009-10 when they were really the only players in town.

The proportion of business going via intermediaries – around 70 per cent – is also good for competition, with consumers benefiting from a choice of product and provider across the market.

There are, however, a couple of negative points we should make the FCA aware of in our responses. First, there are still underserved market segments, such as lending in later life. There has also been a lack of significant innovation in new products in recent years, which may, in part, be due to the regulatory infrastructure we have had since 2004.

All in all, I would encourage brokers to respond to the call for inputs before the deadline. This is our industry and we must not let opportunities to shape and improve it pass us by.

Stephen Smith is director of the Legal & General Mortgage Club