Reading brokers’ responses to the Financial Conduct Authority’s (FCA) Mortgages Market Study, I get the sense that many are concerned about the regulator’s view of mortgage advice.
They want to know whether the FCA is seeking to create an environment in which advice is not accessed as much and instead direct to consumer or technology tools are more prevalent in order to facilitate more execution-only-type business.
I know this will raise the hackles of many advisers who think that a regulator which brought about the Mortgage Market Review (MMR), with advice as its central plank, now appears to be rowing back on that.
In that sense, it will be interesting to see how the future consultation on advice will run and just what the FCA hopes to achieve with such an approach.
Mandatory advice for first-timers
One area of great concern for me personally is the position of first-time buyers in all of this. This part of the market is perhaps more complex, crowded and difficult to understand than ever.
I can think of so many potential avenues for first-timers which, without an adviser there to help them, might seem very difficult to follow.
In this environment, one might argue that the need for professional advice should almost be mandatory, such is the potential for consumer detriment if they try to go it alone.
And here we’re perhaps only talking about the myriad of options available to them, let alone the product choice.
How else can they get the right scheme or right mortgage without seeking advice from a professional?
Would I, for instance, trust my own children to get it right simply by using a technology tool that takes them through the entire process without any advice?
Cost or protections?
Of course, younger people are more comfortable with technology. But when it comes to making a decision about their biggest financial expense, I would be inclined to say that advice is more needed than ever before, not less.
And that seems like an odd position for a regulator to be taking, especially when it should be seeking to reduce the chances of consumer detriment.
The fact it still appears to be concentrating on some very small mortgage cost savings, rather than ensuring the borrower has a sound recommendation and some much-needed protections, is also rather odd.
Earlier this month research from YouGov suggested a third of homeowners would let technology automatically switch them to a different mortgage deal, increasing to 41 per cent for millennials.
That may be the case, but I would still want to use the services of an adviser to clarify that the deal on offer was the best for me.
Technology can perhaps get you to a point where the options are outlined, but I believe the advice element is absolutely critical in getting you to the point of agreement.
That being the case, I would hope that what appears to be a focus away from advice is simply a ‘mis-read’ on the part of the industry.
Having moved the industry to a much better, advised space, it would seem like the biggest of backward steps to be attempting to use technology to move it away.