The FCA decision that the mortgage market needs further regulatory attention says a lot about the journey we are on. It is clear to all that following the crisis it is not yet a properly functioning market, but it appears that it is not anyone’s fault. Not the FCA, not PRA, not lenders, and with multiple help to buy and QE it is clearly not the Treasury or the Bank of England to blame.
That only leaves the inconvenient intermediary. Broker firms are the propeller of competition, the consumer’s friend, the lenders conscience, the oil that matches consumer need with lender supply and takes full responsibility by providing advice. It appears from the latest FCA studies that the broker world needs a market study, with lenders complaining that brokers make unreasonable demands in commercial negotiations. However, call me old fashioned but if you go to a dance, you might be expected to throw some shapes or see some dancing.
In opening up their products to intermediaries, lenders have a series of choices to make and conflicts of interest to manage. Complaining to the regulator that some brokers have got a bit powerful is a bit like saying you don’t like the tango or quickstep, and can only waltz.
How that comes to be the fault of the band, your dance partner or the venue is just plain daft. With a history of not using transitional arrangements fully, hiding profit in valuation fees, not allowing customers to port their mortgage and levying large ERCs in the final months of loans, perhaps some of those complaining about the industry need to have a hard look in the mirror.
As lenders they have total control over both who they lend to and the nature of any contracts they execute. Consumers choose brokers as they understand the complexities lenders create. Looking through any lens that makes it different is a distortion of giant proportions. Consumers choose to come to brokers as they provide choice and value in a free market. Perhaps a lender foxtrot is the answer.