It has taken on some hefty projects in its inaugural year, with the Mortgage Market Review (MMR), crafted by its predecessor, by far its biggest achievement.
But rather than let the regulator tell the industry how it thinks it has performed we thought we’d ask the firms at the coalface to judge the performance of the FCA – one year on.
David Carrington, marketing director, Personal Touch Financial Services, says its focus on culture to deliver good customer outcomes is an improvement on the FSA’s approach – but it’s not all been plain sailing.
Ashley Brown, director of broker firm Moneysprite, says the regulator needs to put more trust in the integrity of advisers and banking sector workers.
Dominik Lipnicki, director of brokerage Your Mortgage Decisions, wants to see more from the regulator to help marginalised borrowers.
David Carrington, marketing director, Personal Touch Financial Services
Who would have thought that one letter could make a difference? The switch from FSA to FCA though has been pretty dramatic and on balance good for consumers.
In a way the biggest change is that one letter. Rather than conduct though perhaps the ‘C’ should refer to culture. It identified that culture is key to good consumer outcomes. The old proverb states ‘the fish rots from the head’ and this is clearly how the regulator sees the market.
There needs to be a golden thread of customer culture from the board through advisers to consumers in their front rooms. The FCA is determined that firms can demonstrate that the thread is unbroken and the long-term strength of our industry has to be through satisfied clients who return time-after-time for more advice.
It’s not all been positive though. The inducements guidance has led to providers all interpreting the guidance in different ways and is a sledgehammer to crack a nut. When training events don’t happen due to arguments over who pays for the cakes there is something wrong.
The switch of consumer credit regulation to the FCA has created unwelcome consequences. Firms are being asked to pay twice for licences and there is a distinct lack of clarity about what the new regime will hold for firms. We welcome the additional responsibility given to the FCA but greater transparency is needed over what is to come.
Ashley Brown, director of broker firm Moneysprite
The FCA has certainly faced many challenges, questions and issues in its first year. How have they done?
Well, thematic reviews that put the customer first have to be a good thing. Despite the many challenges of the MMR, it has been delivered by lending partners and the FCA in a structured and clear manner which is no small achievement.
Some of the most important FCA work carried out this year concerns how lenders should deal with clients in arrears, pushing hard for a more individual approach to finding suitable resolutions. This area is crucial, as no matter how carefully applicants are vetted circumstances can change. How well we as an industry deal with this is a true measure of our worth.
With the FCA instilling the belief that good regulation means ensuring “good conduct” within businesses, this is a mind-set that I believe is important not only to good customer outcomes, but also the profitability of firms in our sector.
They go hand-in-hand, and a sustainable financial services sector going forward must be built on this. However, there also needs to be trust from the regulator that not every adviser or banking sector worker is a crook or purely motivated by self-interest. Rewarding staff well, within a framework where quality is measured, should still be encouraged in my opinion.
I would say there is some way to go to ensure new regulations do not have unintended consequences which put clients in a worse position. I’m sure all advisers have observed lender policy that is almost certainly a direct result of regulation in some cases causing clients needless heartache or cost.
All-in-all, a positive start for the new regulator. Hopefully the much more open and cohesive approach to regulation will continue.
Dominik Lipnicki, director, Your Mortgage Decisions
The FCA has had a challenging and eventful first year as regulator. The big marker in our industry was the introduction of the much anticipated Mortgage Market Review.
Although the MMR was definitely needed it is a shame that some lenders over-reacted to its contents. It has been a divisive issue between intermediaries and lenders, with many blaming the consultation process by the FCA.
That said, the dust is beginning to settle and there has been no cataclysmic effect on the industry from the changes. The injection of coolant into the market appears to have been successful. Consumers are undoubtedly better protected in the long term.
It is also good news for consumers that the FCA has taken on regulatory responsibility for the controversial payday loans industry.
We would have welcomed more pressure from the FCA though to provide for borrowers who need a mortgage into retirement years or those on interest-only mortgages. We can’t afford to ignore the ageing population or the ticking time bomb of those reliant on low-interest rates.
Despite the amount of activity, some things haven’t changed from the FSA days. It would be nice to see more intermediary representation on the FCA staff.
There also remains a distinct lack of specific guidance in our sector. Too much is left open to interpretation and it is up to the regulator to address this.
In summary – same same but different. The FCA is making its mark but it has a long way to go to truly distinguish itself from its predecessor.
