FCA paper brings uncertainty to a fragile market

AMI says it is disappointed that "the sector is not to be left alone" after the FCA published feedback on Competition in the Mortgage Sector today.

Related topics:  Finance News
Rozi Jones
16th May 2016
Robert Sinclair AMI
"AMI is concerned that the paper does not recognise the difference between a broker who works in the best interests of the customer rather than the lender who is out to shift product."
- Robert Sinclair

In a statement, the AMI said that while "some might applaud the FCA decision to challenge the results of its own MMR... AMI is concerned that this will only introduce uncertainty into what is still a fragile market".

In its paper, the FCA found that commercial relationships between different players in the sector’s supply chain - in particular the use of panels - might give rise to competition concerns.

Lenders and lender representatives commented that some smaller lenders have had problems accessing bigger broker networks and feel pressurised to accept their terms. The comments also noted that large broker networks have significant influence over the market, because they control visibility and access to lenders’ products.

Robert Sinclair, Chief Executive of AMI, said: “It is concerning to see lenders continuing to challenge the results of the MMR now through this route, as whilst it has made the process more onerous for some consumers, more now receive good advice with the full protections that this affords. AMI is concerned that the paper does not recognise the difference between a broker who works in the best interests of the customer rather than the lender who is out to shift product."

He added that while AMI has no issue with lenders selling their own products, "this cannot be advice in the full sense of the word, as any solution will be from a restricted product set".

Sinclair expanded: "The Directive set out clear rules around panels and sets out that there must be full disclosure; the fact that a lender is, after all, a one firm panel appears lost in this paper.

"We will work to ensure that any conflicts of interest in commercial arrangements are suitably managed and controlled. We are surprised to see this as an issue as we had assumed that firms that had any such concerns would have dealt with them before now. AMI does not see issues arising from the traditional procuration fee arrangement that was accepted as presenting no issues under MMR and is also enshrined within the European Mortgage Directive."

Sinclair said it is 'great news' that the FCA finds no issues with mortgage prisoners, but was surprised, as "this appears at odds with broker experience".

AMI believes that "there remain underserved groups of borrowers in the areas of, interest only, lending into retirement, self employed, contract workers, foreign currency earners and ex-pats that still need attention if the market is to serve the whole".

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