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Regulatory pause would boost competition, says CML

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  • 14/01/2016
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Regulatory pause would boost competition, says CML
The Financial Conduct Authority (FCA) should pause a review into mortgage competition as the market would benefit from a period of stability, the Council of Mortgage Lenders (CML) said.

Avoiding significant regulatory input for a while would promote competition in the future, the CML’s communication’s officer Bernard Clarke wrote in the CML’s News and Views.

The FCA called for input on competition in early October, and will announce whether it will launch a full review in the first quarter of the year.

The CML said the mortgage market remains very competitive, but that there might be a case for modest de-regulation in some areas. A clarification of the rules by the FCA could help promote more competition.

Clarke argued it might be helpful for the regulator to not take an unnecessarily severe approach with firms over their interpretations of rules for assessing affordability for borrowers whose mortgages extend into retirement.

He said the same could apply to rules covering mortgage sales and advice, which appear to discourage some firms from dealing with online and digital applications.

“If that is indeed what is happening, it is at odds with what the FCA has said about encouraging mortgage market innovation and the use of modern channels of communication,” he wrote.

Clarke argued that any competition review should look carefully at the impact of regulation on the market, and to see whether it is discouraging flexible ways for lenders and customers to communicate how they see fit.

This would include face-to-face, telephone, online or through other digital applications.

The CML believed that it would promote competition, flexibility and choice if the FCA ensured the rules are applied evenly – however customers prefer to transact and service their mortgages, with or without advice and through any communication channel.

The FCA review will examine market dynamics, for example, whether products have become increasingly complex and whether certain types of customers can switch and/or access deals.

It will also look at the impact of the Mortgage Market Review and the FCA’s wider mortgage market programme.

This includes the regulator’s ongoing review of responsible lending, and the recently completed review focusing on mortgage advice and distribution.

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