The devil was truly in the detail of the new rules and moving from the theory to the practical may be more difficult than was perhaps first thought.
We’ve even read that the FCA’s position is now deemed to be ‘neutral’.
We’re afraid, we don’t buy it. Granted, if we’re talking about new aggregators dancing their way into the market with a considerable amount of execution-only business, then the actual music might not be to their liking.
However, if we’re talking about those who’ve been waiting patiently to hit the dancefloor, well then we’re afraid that the FCA has effectively invited them to make some shapes.
Indeed, those very same dancers have been asking for this for the past six years and have finally got their wish.
Misjudging FCA
In this dancefloor battle, the DJ is most definitely not ‘neutral’.
Anyone who thinks this policy statement will not usher in a hugely concerted execution-only effort from the big banks and lenders is not only utterly delusional, they’ve completely misjudged why the FCA has taken this approach, and probably need to think about a change in career.
This is going to happen and you might already say that those very same banking behemoths have been trialling this out with their approach to product transfers already.
In that sense, they probably have the prototype of what to do and they’ll be ramping up their activity in the execution-only space in order to benefit fully from it.
And why wouldn’t they? As mentioned, they’ve been pushing for it for the last half a decade.
To think they’re going to be put off by the rules is ludicrous.
Think about where the major investment is being made by the big banks – is it on intermediary systems and processes, or is it on their direct-to-consumer propositions?
They may be making the right noises about having no concrete plans regarding their execution-only activity, downplaying the level of business they’re already writing, but the truth of the matter lies elsewhere.
Where will this lead the market?
A return to the days of dual-pricing seems likely and advisers will be left with a difficult decision to make about the lenders and products they recommend, especially when that dual-pricing is highly unlikely to be in their favour.
In that respect, it’s a real return to the bad old days and an adversarial situation that we hoped was over.
How will advisers compete in this space? Will they even want, or be able, to?
So, while we all ruminate on what happens next, be aware that fight for mortgage business has not only got more intense but those who want to target consumers directly are now tooled-up.
It’s already rare for us to speak to a client before they’ve had lender contact and now a new line of attack is opening up which will seek to remove the adviser altogether.
This is an important moment in time for the advice profession – to ignore it will only ensure we leave the dance a lot quicker than we entered it.
What makes it all the more crazy, is that the regulatory bouncers are not just standing idly by, they’re actively encouraging it.
