In the Responsible Lending Review - two years on from the Mortgage Market Review which restricted lending to buyers in the wake of the credit crunch - the authority has given a thumbs-up to most lenders, who are said to be implementing the MMR "positively."
However, the FCA says "there is scope for improving consumers' ability to make better choices about mortgage deals."
In particular, towards the end of this year the authority will launch what it calls "a targeted market study focused on consumers' ability to make effective choices, with a view to improving how competition works in consumers' best interests."
This will consider the following questions:
Do the available tools for helping consumers make choices (such as price comparison websites, best-buy tables, advice) effectively meet their needs?
Are there any distortions because of undue focus on particular headline charges or features?
Is there suitable provision for specific consumer segments with less common needs/circumstances (for instance, those without online access, those with greater levels of experience and understanding who have lesser advice needs, older borrowers needing advice across a wider product range)?
Are there opportunities for better technological solutions?
What is the impact of increased intermediation in the mortgage sector on consumer outcomes?
How has the Mortgage Market Review changed the market in terms of intermediation?
Are there differences in the outcomes for those consumers who obtain their mortgages through mortgage brokers when compared with those who go direct to lenders? If so, what drives those differences and is there room for improvement?
What is the impact of panel and other commercial arrangements between lenders, brokers and other players in the mortgage supply chain?
Is there potential for conflicts of interest or misaligned incentives?
Do any such arrangements create barriers to entry or expansion resulting in less consumer choice?
"For millions of consumers a mortgage is one of the biggest financial transactions they will enter into in their lifetime so it's encouraging to see firms embrace the spirit and the letter of our rules" says Christopher Woolard, director of strategy and competition at the FCA.
"At the same time, there appears to be more to be done to improve competition in the mortgage sector. Competition can play a key role in ensuring that the sector works well, delivering lower prices, better products and choice, and more innovation. Based on the evidence we've collected so far, we intend to launch a forward-looking market study later on this year, with particular focus on the roles played by intermediaries and panels."
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