The trade body raised concerns about where regulation responsibility will lie once the new regime is instigated next year, and how it may leave vulnerable customers exposed.
“Open Banking escalates AMI’s already stated concern over whether online decision trees – automated, and then branded advice – can actually constitute fully regulated advice,” it said in its Quarterly Economic Bulletin.
“AMI has already expressed concern about the language used by a number of mortgage broker firms claiming to offer online automated mortgage advice to consumers. We would reiterate these concerns and will now go further.
“We actively believe that an imprecise understanding of mortgage regulation, market dynamics and the laws of consumer protection under the purview of the Financial Conduct Authority combined with a disproportionately loud public voice is misleading consumers,” it added.
While acknowledging that Open Banking was a positive step for consumers and the industry, AMI also urged the regulator to be mindful of unintended consequences that could have a detrimental impact on consumer finances.
Affordability Assessments
AMI also called for affordability assessments to be read across to the consumer credit sector following the Financial Conduct Authority’s assumption of its supervision in 2014.
It said that many warnings being issued about the scale of consumer credit debt would prove to force the likely future path of regulation.
Although only 1.25% of consumers were struggling to service their debt, AMI said around 40% of consumer credit applicants were being approved for prime customer rates, “which seems too high”.
And the trade body highlighted that a number of factors existed which could dampen any potential uptick in gross mortgage lending this year.
These included a severe lack of housing stock, a definite worsening of consumer perception in price inflation prospects, and continued pressure on real wage growth adversely affecting affordability.
“Intermediaries are nevertheless reasonably well positioned to weather any potential storm. Brokers have improved remortgage penetration considerably over the past few years and fierce product competition between lenders continues to drive enquiries,” it concluded.
