The Financial Conduct Authority (FCA) has announced the start of a market study into Britain’s mortgage market. A press release issued on 12th December 2016 revealed the start of the study, which was previously announced back in May. The study will delve into many areas of the mortgage marketplace and how consumers interact with it and are affected by it.
The press release indicates that two main questions will be posed:
- Do mortgage consumers have access to the right advice and tools required to help them decide on a mortgage?
- Do any commercial arrangements between lenders and other people in the mortgage marketplace create conflicts of interest or put consumers at a disadvantage?
The final report will not be available until early in 2018, but there will be an interim report available in summer 2017.
Will the study be of benefit to consumers?
It could be. The FCA will look at the possibility that some consumers are not getting the best level of advice when looking for a mortgage. For example, the study will consider the potential for conflicts of interest to arise when different parties in the mortgage sector create commercial agreements with each other. This could mean consumers may not have the best selection of help or advice that could assist them in finding the best mortgage for their needs.
Each stage of the journey a consumer makes when looking for and applying for a mortgage will be covered. According to its terms of reference document, released in association with the press release, the FCA said “we want to understand whether consumers are empowered to choose on an informed basis.” They will also consider how people receive information and whether digital channels could be improved upon to ensure people have easy access to the information they require.
Could the Mortgage Market Review rules be changed?
The financial watchdog is going to review the MMR rules as part of this study. It wants to assess what the outcome has been from these rules, and whether consumers have been negatively impacted because of them.
Certainly, some people have been impacted and have had to sit through long interviews to try and get a mortgage, when in the past this would not have been necessary. Many lenders have been accused of making it too difficult for people to get mortgages or change from existing ones to ones with better interest rates attached. There are many stories of people who have paid their mortgages without incident for many years, but who have been rejected for a switch to another mortgage since the MMR rules came into force.
We shall have to wait a few months to see whether any changes could become apparent following this review. But since the final report from the FCA won’t see the light of day until 2018, consumers who are struggling to comply with the MMR rules aren’t going to see any change in their situation for the foreseeable future.