Recent weeks have seen the FCA issue a series of documents, which continue to challenge how well the lending sector is performing and the intention to direct significant FCA resource at banks and mortgage lenders in particular. This started with a guidance consultation following a review that looked at risks to customers from performance management at firms, building on earlier work on incentives which addressed the issue of aggressive sales targeting. This was followed by a thematic report on firms’ governance over mortgage lending strategies. It again paints a less than rosy picture of current practices. This flood was completed by the 2015/16 Business Plan which sets out that the FCA wants to look at several of the key issues that are causing debate in the mortgage sector, from barriers to competition and consumers’ ability to switch provider or access credit.
Given that we are less than a year from implementing MMR, such a continuing focus on the mortgage market is disappointing. What concerns the professional broker community is that this risks further damaging our public reputation. AMI continues to raise the issues of the lack of use of the transitional rules by many lenders and the taking of too many non-essential costs into affordability calculations.
We hear much rhetoric about banks moving away from the practices of the past and rebuilding consumer trust. The concerns expressed by FCA appear to indicate the pace of change is too slow and is not being evidenced on the ground. We think that if these behaviours were seen in the intermediary sector, firms would be subject to severe sanction. But as these are organisations which are too big and important to be disciplined in such a way, we have “death by a thousand cuts”. The challenge is how we get the industry to wake up and actually want to change its behaviour and act in consumers’ interests. There must be a better way.