FCA launches new study of UK mortgage market

The Financial Conduct Authority (FCA) has launched a market study to consider whether competition 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 study arrives at a time when the mortgage market has been under increasing scrutiny in the UK. In 2015, the Mortgage Market Review was implemented, tightening financing conditions to make sure that affordability was being properly assessed by lenders. Since then, affordability criteria is also being upped for buy-to-let loans, with the Bank of England and the Prudential Regulation Authority clamping down on the lending sector, as part of a wider series of government measures against the buy-to-let market.

Landlords can rest easy, though: commercial mortgages, second charge and buy-to-let mortgages are not the focus of this study, although the FCA says it will take into consideration any insights gained through the market study

Following interaction with a wide range of market participants about their experience, the FCA aims to publish an interim report in summer 2017, setting out 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, says: “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.”