The Financial Conduct Authority (FCA) has dropped the quality measure from its proposed mortgage broker search tool, but will include data about the number of lenders a broker uses.
As part of its Mortgages Market Study (MMS) it added that intermediaries should use more lenders and consumers should have access to a broker comparison tool to help them find the right broker for their needs.
Consumers being able to make their first contact with the mortgage market on “an informed basis”, was one of the findings in the regulator’s final MMS report published today.
Current tools are, according to the report, “limited in both scope and coverage.”
The report complained that intermediary participation in current tools is voluntary, although it stopped short of saying it should be compulsory, and said they failed to provide consumers with the information needed to compare intermediaries.
The report was particularly keen for consumers to be able to see “the extent to which an intermediary uses lenders from across the whole market to find the best deal.”
It wanted intermediaries to use more lenders and argued that this had financial benefits for consumers, stating:
“We found that intermediary firms that use a small number of lenders recommend more expensive products on average compared to intermediary firms who use a greater number.
“The price difference could be around £400 for the first year of the incentivised period,” the FCA said.
SFGB to host broker choice tool
The way to do this, the reported said, was introduce a tool that would give consumers all the information they need to choose their intermediary.
This follows the news earlier this month that, from 2020, the FCA directory would include mortgage brokers for the first time.
The report said the government’s Single Financial Guidance Body (SFGB) would host a broker choice tool.
It will provide details of brokers’ expertise and the lenders they use but it will not, as last May’s interim report had indicated, be used for quality assessment of brokers.
On this topic, the report concluded: “SFGB will undertake discovery work during quarter two and three to scope the project and establish exactly what information will be presented on the directory and in what format.
“It will do this by consultation with the FCA and industry and consumer representatives.
“We will engage with existing commercial providers of tools designed to help consumers choose an intermediary to seek to ensure that this approach does not unduly disadvantage them.”