Looking at the Mortgage Market Study
By Simon Broadley | 22 February 2019
SUMMARY: TenetLime Managing Director and AMI Board member, Simon Broadley, shares his thoughts on the most significant changes that the FCA’s Mortgage Market Study could bring for brokers.
Of the areas in scope for the Mortgage Market Study, two in particular are likely to deliver profound change – long awaited support for 'mortgage prisoners' and the creation of a digital comparison tool for consumers to help find a mortgage adviser to suit their individual needs.
In terms of the digital comparison tool for consumers, much like choosing a hotel on one of the various comparison websites, priorities will differ from customer to customer. Some place greatest importance on the views of other guests, whilst others use locality or facilities as the main driver for making their decision.
What is unclear at this stage is both who will develop the comparison tool, and the specific criteria that it will allow consumers to search by when looking for an adviser. I am sure that a natural concern of the regulator will be to ensure that both the criteria on offer do not become overwhelming, and that they remain as objective as possible to avoid manipulation by market participants.
The final risk is that without a comprehensive, compelling and sustained programme of consumer engagement, the comparison tool could quickly become a white elephant. To succeed in terms of the initial objectives, it needs to become the go-to tool for consumers. Comparisons to the change in consumer behaviour driven by TripAdvisor have been used to outline the regulator’s aim. Today few people now simply type into a search engine 'restaurants in Leeds', much preferring to use TripAdvisor due to the depth of comparison it offers and perceived independence of its content.
Irrespective of the specifics of how the tool operates, as a large network, we are feeling positive that any ranking criteria will play to our strengths, with our whole of market product range, quality control, financial integrity and high customer advocacy, as demonstrated by ongoing TCF scores over 99% for TenetLime.
The second key area considers how the regulator is looking to actively support the needs of consumers who have found themselves as so-called 'mortgage prisoners'. As many as 200,000 people are thought to be in a situation where they cannot move from their existing mortgage product, many of which have reverted to SVR. This may be due to the mortgage product being taken out before more stringent affordability requirements were introduced, or simply because their original lender failed during the financial crisis and the mortgage book was transferred to a third party administrator. Press coverage and comment has been significant in recent months and I expect this to be a key strand within the study’s final findings and interventions.
What remains unclear at this stage is where liability for any subsequent default or mis-selling complaint might lie, if the regulator makes such an active intervention.
I am sure this will be worked through however, and although a long-standing issue, it is encouraging to see the FCA facing into this challenge and consciously trying to free customers, who through no fault of their own, find themselves in a challenging position.
At an industry level and via board membership of AMI, Tenet has been helping contribute towards ensuring that the voices of brokers have been actively represented and heard by the regulator, so we'll be keenly awaiting the publication of the final rules and policy when they are published later this spring and are hopeful that the study will primarily represent an opportunity for the advisory community.
By Simon Broadley
Simon Broadley is TenetLime Managing Director and AMI Board member.