Press comment: FCA Mortgage Market Study should better understand
that the best deal is not necessarily synonymous with the cheapest
26 March 2019
If you are covering the FCA’s final Mortgage Market Study report released today, please see the following comment by from Gemma Harle, managing director of the Intrinsic mortgage network , part of Quilter:
"For most people a mortgage will be the largest debt they take on in their life and it is reassuring that the Mortgage Market Study, released today, recognises that the mortgage market works well for most and is drastically different to pre-financial crash times.
"Alongside addressing the growing problem of mortgage prisoners, one of the main themes of today’s paper is supporting consumers to have more access to information surrounding mortgages, which is certainly a good thing. Technology is such a staple of everyday life that giving consumers tools to allow them to understand more about products and their associated costs will massively help people understand what they can achieve with their money. However, these tools will require the full engagement of the industry and may still be a long way from inception.
"The paper’s focus on creating some new ways to help mortgage prisoners is excellent. This has been a growing problem since the financial crash and we are now in a position where consumers are locked into products which may no longer be suitable with no way of finding a better project. However, one of the main concerns is that the data used to inform this paper was submitted by lenders and intermediaries four years ago and is not likely be an accurate snapshot of the mortgage market today.
"The FCA has rightly highlighted that there needs to be more innovation in the mortgage market, however, its view is that the bulk of this innovation should happen at the distribution stage opposed to modernising the products themselves. The paper suggests that more products should be available to be transacted online with the view that some consumers are receiving unnecessary advice. The mortgage market is complex at best and requires an in-depth understanding that many people simply won’t have time to comprehend when it comes to choosing a product. Even with all the necessary tools at hand, professional help will often be key to helping someone get the best deal and it’s worth noting the best deal is not necessarily synonymous with the cheapest. Currently the tone of the paper seems to constantly champion the idea that cheaper is almost always better, which is not the case.
"The proposal for the new Single Financial Guidance Body to develop a directory to help customers make a more informed choice of mortgage intermediary is certainly laudable and a good prospect but the industry will need to plough a huge amount of money into this project to make it viable. There is such a vast array of different mortgage advisers out there that a one size fits all approach to this will make the directory open to gaming and will not serve its intended purpose of helping consumers choose an intermediary right for them.
"Mortgages are one of the biggest financial decisions anyone makes in life and are a long-term commitment. Making an error and failing to meet payments can have far reaching consequences which will damage someone’s life drastically and could result in a spiral of debt. Therefore, professional advice is an important component in this equation and today’s paper while does recognise this to a certain extent, fails to highlight quite how crucial it is to customers getting a product most suited to their financial needs."
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