The Financial Conduct Authority (FCA) has today launched a market study to consider whether competition in the mortgage sector can be improved to benefit consumers.

The FCA wants to understand whether consumers are empowered to choose on an informed basis between products and services and are in a position to understand whether these represent good value for money. The market study will explore two questions:

  • At each stage of the consumer journey, do the available tools (including advice) help mortgage consumers make effective decisions?
  • Do commercial arrangements between lenders, brokers and other players lead to conflicts of interest or misaligned incentives to the detriment of consumers?

The FCA will also review whether there are opportunities for better technological solutions to problems we identify, including greater use of digital channels to deliver information or advice. The FCA announced the study and its focus in May, having gathered feedback on competition in the mortgage sector. During the study, the FCA will be engaging with a wide range of market participants about their experiences. In a terms of reference document published today, the FCA provides further detail on the scope and procedures of the market study. The FCA aims to publish an interim report in summer 2017, setting out our analysis and preliminary conclusions. This will provide stakeholders with an opportunity to comment prior to publishing our final report in early 2018. 

 Christopher Woolard, Executive Director of Strategy and Competition at the FCA, said “As a mortgage is likely to be the biggest financial commitment most people make in their lifetime, we’re keen to ensure that competition in the mortgage sector is healthy and working to the benefit of consumers.”

 The Council of Mortgage Lenders welcomes the focused and constructive approach of the Financial Conduct Authority in undertaking a market study on mortgages, focusing on potential influences on customer outcomes now that the changes brought in under the Mortgage Market Review have had a chance to bed in.

The CML will consult with members in responding to the FCA, but in the meantime sees it as helpful that the FCA is looking at the whole range of players involved in the mortgage and house-buying process, as well as at the potential offered by technology. It is important to understand what drives and influences the products that consumers have access to and ultimately choose. A clear understanding can only be good for the customer interest.CML director general Paul Smee sayid “The FCA’s rule changes in 2014 created a seismic shift in how mortgages are sold. It is entirely right that the regulator reviews their effect, as well as how commercial relationships in the market have developed in the light of the new environment. Any opportunity to review how the market can best work for the benefit of consumers is an opportunity worth taking, and we will be participating constructively.”