Independent review and analysis

Mortgage Market Study and Working Together

There were raised eyebrows recently when the Financial Conduct Authority (“FCA”) announced another mortgage market ‘review’, this one entitled a mortgage market study (“MMS”) which is due to take place in Q4 of 2016.

This follows feedback it received when asking for commentary on areas of the mortgage sector where competition may not be working effectively.  Specifically the FCA declared that there was scope to improve competition issues faced by consumers in today’s marketplace.  The regulators stated that it was “not looking to tear everything up, but it is our duty is to enable competition to thrive” and “to create the conditions for a healthy competitive process and then let that process run”.

Although the full terms of reference will not be scoped out until later this year, some firm indicators have been laid down to show what areas will be reviewed.  They include the significant role of intermediaries; since the introduction of the mortgage market review (“MMR”) the introduced mortgage channel is now believed to represent around 70% of the market and may have affected customer outcomes.  Issues around transparency, the effectiveness of product selection and more effective use of technology appear to be on the agenda.

Another aspect is expected to report whether there are any differences between consumer outcomes for those choosing to use an intermediary compared to those who approach a lender direct.

Finally, it appears as if panel arrangements between intermediaries and lenders could come under scrutiny with commercial arrangements being high on the agenda.

With the above in mind, it was good to see the relaunch of  the ” Working Together” document, the industry sales and servicing guide for lenders and intermediaries.  It is being adopted by members of the Association of Mortgage Intermediaries (“AMI”), Council of Mortgage Lenders (“CML”) and the Intermediary Mortgage Lenders Association (“IMLA”) and it sends a positive message from the industry.  The paper recognises the importance of monitoring and managing the relationship between lenders and intermediaries to work towards good outcomes for customers

In summary, it appears that regulatory engagement and input into the sector is now firmly established.  The FCA is already promising three follow up reviews, going into more detail than it ever has previously.  As such it is incumbent on all parties in the mortgage supply chain to be in touch with trade bodies, regulators and external commentators to make sure they do keep up to date on developments as the market continues to recover.

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