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The Mortgages Market Study has a significant focus on technology and innovation.  In trying to put that into perspective it appears it starts with desire from government to change our market.  Earlier this year, the Department for Business, Energy & Industrial Strategy issued a green paper on “modernising consumer markets”.  It sought views on how to ensure that the markets are suitable for the modern economy and consumer.  The paper was based on principles that the government believes are key to responding to the challenges and opportunities of modern consumer markets:

The paper primarily focused on utilities but included references to financial services with government holding the following beliefs:

The Competition and Markets Authority (CMA) response to this paper included:

For each Parliament the government issues a non-binding Strategic Steer for the CMA.  The draft Steer sets out that the CMA should lead work with sector regulators to ensure the overall competition regime is co-ordinated and that consumers are protected from illegal and anti-competitive practices.  Government also wants the CMA to help consumers get the most from the digital economy, through building consumer trust in markets and enforcing the law to protect consumers and engage and lead the UK and international debate on competition and consumer policy in the digital economy.

In the FCA’s recently published annual report on competition it sets out how it provides “expert input on the financial services sector” to the CMA during its investigations.  In light of the government’s drive for “a world-leading digital economy” and the mandate it has given the CMA, it appears the approach taken by the FCA competition team has a deeper background.

In particular the Mortgages Market Study is all about enhancing choice and empowering consumers.  Industry concern is that this is ahead of the development of the technology, thinking and controls required in a lending based world with 25 or 30 year contracts.  This is very different to the annual or short term contract in the rest of financial services.  The importance of the protections afforded by advice needs to kept front of mind.

Robert Sinclair
Oct 18

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