Simon Broadley has hailed the FCA’s Mortgage Market study as bringing significant change for brokers.
The managing director for TenetLime said the most profound changes the study could include the long awaited support for ‘mortgage prisoners’ and the creation of a digital comparison tool for consumers to help find a mortgage adviser.
Writing in the firm’s blog, he said: “Of the areas in scope for the Mortgage Market study, two in particular are likely to deliver profound change – long awaited support for ‘mortgage prisoners’ and the creation of a digital comparison tool for consumers.
“In terms of the digital comparison tool for consumers, much like choosing a hotel on one of the various comparison websites, priorities will differ from customer to customer. Some place greatest importance on the views of other guests, whilst others use locality or facilities as the main driver for making their decision.
“What is unclear at this stage is both who will develop the comparison tool, and the specific criteria that it will allow consumers to search by when looking for an adviser. I am sure that a natural concern of the regulator will be to ensure that both the criteria on offer do not become overwhelming, and that they remain as objective as possible to avoid manipulation by market participants.”
He added that the final risk is that without a comprehensive, compelling and sustained programme of consumer engagement, the comparison tool could quickly become a white elephant.
He added: “To succeed in terms of the initial objectives, it needs to become the go-to tool for consumers. Comparisons to the change in consumer behaviour driven by TripAdvisor have been used to outline the regulator’s aim. Today few people now simply type into a search engine ‘restaurants in Leeds’, much preferring to use TripAdvisor due to the depth of comparison it offers and perceived independence of its content.
“Irrespective of the specifics of how the tool operates, as a large network, we are feeling positive that any ranking criteria will play to our strengths, with our whole of market product range, quality control, financial integrity and high customer advocacy, as demonstrated by ongoing TCF scores over 99% for TenetLime.”
Broadley also praised the regulator for helping so-called ‘mortgage prisoners’. As many as 200,000 people are thought to be in a situation where they cannot move from their existing mortgage product, and have reverted to a standard variable rate.
He added that this may be due to the mortgage product being taken out before more stringent affordability requirements were introduced, or simply because their original lender failed during the financial crisis and the mortgage book was transferred to a third party administrator.
He said: “What remains unclear at this stage is where liability for any subsequent default or mis-selling complaint might lie, if the regulator makes such an active intervention.
“I am sure this will be worked through however, and although a long-standing issue, it is encouraging to see the FCA facing into this challenge and consciously trying to free customers, who through no fault of their own, find themselves in a challenging position.”
Commenting on the issues raised by Broadley, Carl Shave, director of Just Mortgage Brokers, said : “The points of ‘mortgage prisoners’ and that of the digital comparison tool, are likely to be very influential in the broker industry. These are both areas that can have a significant impact in the way the market is perceived by consumers, brokers and lenders alike.
“The position of the ‘mortgage prisoner’ is one of much heated debate with varying opinions, and the FCA must ensure that any findings treats all existing and would be borrowers in the market fairly and does not give what could appear to be an unfair advantage, especially where affordability is concerned.
“The comparison tool must also be given the thought and attention it requires to be a success. Done correctly such a tool can be a valuable instrument that helps the consumer and the industry alike however if not, the damage caused can be long lasting and even irreparable.”
Alan Lakey, founder of CI Expert, added: “The mortgage prisoners problem has existed for 11 years now and it is staggering that it has taken this long for the regulator to identify it as problematic. Work in this area is long overdue and it will assist those who are locked into lenders and trapped by circumstance.
“The digital comparison tool may not prove as effective. The questions that arise are – how will it discriminate between those advisers who are very good, just good or otherwise capable. I cannot see how a fair analysis can be made as it is a subjective area and not easy to assess.
“Neither am I confident that consumers will use such a tool as word of mouth and belief in using one of the high street lenders is entrenched into most consumers psyches.”
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