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MMS: Let’s hope the FCA is not too proud to u-turn – Bamford

by: Pad Bamford, business development director at AmTrust Mortgage & Credit
  • 29/08/2018
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MMS: Let’s hope the FCA is not too proud to u-turn – Bamford
The Financial Conduct Authority’s (FCA) now has all the responses to its Mortgages Market Study Interim Report and without knowing the number received by the regulator I sincerely hope there is plenty for it to digest over the next few months.


Judging by recent public utterances we might expect it has much to consider about the contents of that report, the proposed measures, and the fundamental flaws in its analysis which have been highlighted with such voracity.

In all the time I have worked in the mortgage market, I can think of no other occasion when the industry has produced such a collective and co-ordinated response to a regulatory document.

Normally, there are disparate groups pushing their own agendas which don’t chime with others, but I’ve seen nothing over the past couple of months to think that the industry is anything but united in its response.

Both intermediary and lender trade bodies have entered the public domain with a range of criticisms that I hope the FCA now takes on board.

The architects of the report should certainly be kept awake at night by the chorus of disapproval that has been a constant over the last couple of months, and which has highlighted some very concerning areas, particularly in terms of the regulator’s view of mortgage advice.



Better off with execution-only

It’s right and proper that the regulator reviews the market regularly.

Nothing stays the same for long, and it is important the FCA understands the developments and the changes introduced by the extremely positive Mortgages Market Review (MMR).

However, what should concern all stakeholders is the apparent u-turn in the regulator’s direction of travel, especially when it comes to the importance of mortgage advice.

Now, it would seem, the FCA believes many consumers would be better off opting for an execution-only mortgage, giving up many of the protections they naturally get if they use a mortgage adviser. How we have moved from the MMR to this point is anyone’s business, but I suspect a change of personnel has a lot to do with this.


Clearly disturbing consideration

The issue of mortgage cost has been at the forefront of many minds when looking at the report, and the view that cheapest somehow equals best is clearly very disturbing.

However, there are other areas that should be reviewed.

This should include the data used to produce results which seems to be two years old, and the fact that advisers would look at suitability, affordability and other factors such as lender service although this was not a part of the study.

Added to this is the recent raft of data around product transfers – and the huge number of transactions/lending taking place in this space – which were not taken into account by the Interim Report.

Some of the potential measures outlined also give cause for concern – the adviser comparison website sounds simple in theory but is wrought with potential problems and unintended consequences – not least the data used to rank firms and how it might be policed.


Not too proud to u-turn

However, at the heart of this discussion is the pre-eminence of advice in the mortgage market.

Any measures or proposals which negate some of that importance or the protections it offers, should (quite rightly) be fought fiercely and it’s rather stirring to see the trade bodies do just that.

The final report will determine how much the regulator is in listening mode when it comes to the industry’s views on this – one would hope it is not too proud to u-turn on a journey which nobody in the mortgage market believes is worth taking.




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