The flurry of papers from the FCA recently, all concentrating on the post-Mortgage Market Review (MMR) world, reveals both a regulator unwilling to let the grass grow under its feet and, in my opinion, unfortunately a regulator unwilling to let the status quo persist for too long.
Even in this world of constant regulatory intervention – we are after all just a few months into the post-Mortgage Credit Directive (MCD) environment – it seems that more is forthcoming with the promise of further amendments, changes and developments. Far be it for me to criticise– as after all it’s important that the regulator reviews how the market has introduced the changes and whether they are having the desired effect – but I can’t help but agree with Robert Sinclair of AMI in that one can feel the strong hand of the lenders’ lobby on this one.
Indeed, as Robert says, given the market does not seem at its steadiest (Brexit anyone?) to rock the mortgage boat further with a ‘targeted market study’ which (once again) is likely to result in further new measures to be introduced, does not (to further the metaphor) create confidence that we have a firm hand on the tiller. One has to question whether more uncertainty about what further regulatory changes might soon be about to crash on the mortgage shore is in the best interests of all stakeholders.
Of particular interest in ‘FS16/3: Feedback Statement – Call for Inputs: competition in the mortgage sector’ was the significant focus on ‘commercial relationships’ within the supply chain, in particular, broker networks and the influence they are supposed to have over the marketplace. Concerns have been raised about limited panels, the difficulties smaller lenders supposedly have on getting onto network’s panels and the influence this might have on the market in terms of product visibility and availability.
It’s clear that some of the respondents to this paper appear to feel they are at a distinct disadvantage when it comes to the post-MMR environment. Without knowing exactly who these respondents might have been, I’m going to hazard a guess that certain lenders have not been too enamoured at the introduction of measures which have pushed up the intermediary share of the market to close to three-quarters of all mortgage transactions.
Call me a cynic, but I have to question whether such firms are looking for the regulator to re-engineer the MMR to make it much more favourable to their direct to consumer mortgage offerings? After all, if we’re talking about product choice, access to ‘true advice’ and the ability to accurately measure affordability and place clients with the right lender on the right product, then I would suggest that the market moving in favour of intermediation is a positive result for consumers.
That being the case, it seems the right moment to point out that we as a network don’t have a lender panel. We are completely whole of market as I would suspect most other networks are, and therefore there’s something of a fundamental flaw within the paper when talking about network lender panels. Indeed, Stonebridge has been fortunate enough to participate in the launches of a number of new lenders coming to market and therefore we truly do have a whole of market offering for our advisers to offer to their clients. We think it’s vital that we provide this access and certainly it is a demand from our advisers.
Perhaps therefore the focus and accusations on lender panel restrictions, small lenders saying they are being barred, ‘undue influence’ being exerted, shouldn’t actually be placed upon the network market, but actually on those organisations who do actually limit their panels, such as some of the corporate estate agents who operate in this way.
Our aim on the other hand is to provide our advisers with access to all the products that are applicable to their clients – clearly there are many lenders with very similar offerings but it’s still important to have complete access to satisfy our advisers’ ability to offer the right product and provide quality advice.
This ‘argument’ could run for some time. I however believe that, certainly in our case, we are operating both compliantly and effectively, and that our relationships are neither overly complex or hinder certain lenders/providers from making their mark. Perhaps it is time to rigorously defend the network model and understand that networks offer whole of market to their ARs and that the post-MMR ascendency of adviser distribution is not in any, way shape or form anti-competitive.
Richard Adams is managing director of Stonebridge Group