The regulator flagged the risk of Brexit posed by potentially unregulated products and its duty of care to UK consumers.
“We will work closely with the Treasury as part of their review of related issues including the payments system and regulatory co-ordination. One key question is about the freedom to focus more on principles and outcomes than detailed rules – the duty of care debate is part of this. But equally important is whether UK regulation should permit ordinary consumers to be exposed to high risk, often unregulated, products. It’s clear that risk warnings alone are not enough to provide adequate levels of protection for some of these products.”
On the MMS, the regulator found the mortgage market works well in many respects.
It said: “Engagement is high and consumers are getting mortgages that are suitable and affordable. But it could also work better in other ways.”
The FCA highlighted its backing of better information and innovative tools to help customers identify at an earlier stage the mortgages they qualify for. The regulator has published a consultation into mortgage prisoners in a bid to find an industry-wide solution to the affordability issues these borrowers suffer, often with closed book lenders.
However, in responses to the consultation, UK Finance and the Building Societies Association (BSA) said despite supporting the overall goals of the regulator’s proposals, modifying the affordability assessment may only help between 2,000 and 14,000 of the 500,000 mortgage prisoners.
They both agreed the lack of data available on borrowers trapped with closed book lenders also restricted understanding of those consumers.
Customers on interest-only, high loan-to-value (LTV) or self-certified deals may be particularly difficult for lenders to help, Mortgage Solutions understands.
The regulator said its annual highlights included continuing action to improve protections for users of high-cost credit and its campaign to stir consumer action on Payment Protection Insurance (PPI) claims ahead of the 29 August deadline.
Andrew Bailey, chief executive of the FCA said: “As we reflect on the last year and what we’ve achieved, we are also mindful of the rapidly evolving landscape. Innovation in new technologies, together with changes in consumer behaviour and expectations in wider society are driving rapid change in financial services.
“In addition, we will have to develop a new relationship with the EU. So, we must consider the future of regulation and our own capabilities to ensure that the UK regulatory system remains fit for the challenges to come.”