Sometimes you wonder if the FCA get the value of advice and the protections that it affords consumers. What does ‘unnecessarily channelled into advice’ mean? From what we can gather, the FCA has looked at a group of borrowers who did not take advice pre-MMR and suggested that because this group did not go into arrears, or become delinquent borrowers, then there would be consumers – in a post-MMR world – who did take advice, who did not need to because they ‘had sufficient financial capability to make suitable product decisions on their own’.
This seems to suggest that the post-MMR world which highlights the absolute importance of advice is now somehow irrelevant. That advice is neither here nor there to consumers, and the fact a group of borrowers managed to choose a product on their own and did not financially combust, now means that advice is an irrelevance to a group of consumers.
This, despite the fact, that the need and demand for advice is perhaps greater than it’s ever been; that we have a market which is increasingly competitive and complex, and which – as previously mentioned but seemingly forgotten by the FCA – getting advice gives you protections you simply don’t get by going direct or execution-only. The latter of which is another obsession with the regulator apparently driven to have the market produce ‘tools’ which drive more execution-only business which again flies in the face of the MMR.
Is the FCA suggesting it wants to deregulate the industry? That consumers, who perhaps do not understand the process, should be allowed to run the gauntlet of applying direct because they will probably be okay? The industry was regulated for a reason – to protect the public when it comes to purchasing/refinancing the biggest asset they are likely to own. Does the FCA now feel this isn’t necessary?
The report – while protesting that it is not fixated on price – continues to focus on this area in minute detail, suggesting that consumers are still getting a raw deal when it comes to securing the absolute cheapest mortgage.
Plus, it suggests advisers are far too quick to select a product because they will then get their procuration fee quicker, rather than looking for a more suitable/cheaper product. As if the adviser can’t be both quick and diligent in their recommendation of a product, and that we are only concerned with getting the procuration fee in our bank accounts as quickly as possible. Also, the notion that brokers just choose a lender due to the speed procuration fees are paid is utterly laughable as most intermediaries who are whole of market will submit via a mortgage club who pay all procuration fees on exchange regardless of the lender. This feels that the FCA is somehow embittered over potentially how much professional intermediaries earn for providing responsible, valuable, advice and by helping consumers realise their property aspirations.
And while it outlines all of this, at the same time, it suggests the market is working well, intervention is not required and it is happy to allow the market to come up with solutions. Even though, presumably, if the market decides a solution is not required or commercially sustainable, it will then intervene to deliver one, specifically in the tech/execution-only space.
The apparent contradictions throughout makes this something of a ‘Jekyll and Hyde’ report.
Sebastian Murphy head of mortgage finance and Rory Joseph director of JLM Mortgage Services