Oct 21 – Rumble, thud and drone

The dull rumble of consultation after consultation coming down the road from the FCA shows no sign of abating.  The thud of concept after concept landing on a market that has low consumer inertia and is highly competitive appears distinctly at odds with the way we think the residential mortgage market operates.  Despite the noise from the FCA that they are going to focus more on data and supervision, this continuous treadmill of ideas will force good firms to incur more cost and add bureaucracy to processes that are already complex.  This is despite Rishi Sunak promising a bonfire of previous, but now unnecessary, EU regulation.  We cannot wait!!!!  Can they start with the ESIS, ridiculously incorrect APR definitions and a “cheapest rule” that adds grit to a process that should be simple.   In the meantime, we have the on-going drone of changes required which are loosely connected to what mortgage advisers do in front of their customers.

Vulnerability, Diversity and Inclusivity, Fair Value in General Insurance and Protection, Consumer Duty and reviewing the role and structure of networks are all on the agenda.  I remain convinced that the issues are predominantly in other markets, but that does not prevent us having to stop, consider and review on your behalf here at AMI, but also help you know what you have to do to keep safe.  We know we have work to do on diversity and inclusivity, but it was not the FCA that has been driving the change on this issue.

The latest podcast from the FCA is a very new way of signalling change to the market.  In it the FCA sets out their concerns over the investment advice market and what they think they may need to do.  It certainly implies that they see smaller firms, flying under the radar as a big risk.  The solution inferred is that firms will need to hold more capital and that they will be monitored more stringently.  New firms will find it tougher to get authorised.  If firms cannot find that increased level of capital the only way for them to conduct business will be as an AR of a network.  However, they have commenced a significant activity to ensure that all those have sufficient systems, reviews and controls.

So, it will become more expensive to play.  What happens in the world of investments will have to map straight across to mortgages and protection, unless the FCA fundamentally restructures its rule book.  We will continue our dialogue with FCA and keep reminding them that without evidence of harm in the mortgage market and proper cost benefit analysis, then change is hard to justify.

This is going to be visited on a market that has just delivered, at the end of September, another bumper set of completions on property sales to add to that at the end of June.  My thanks go out to all those who have pulled out all the stops as brokers, and our partners in lenders, conveyancers and surveying as well as the removal men as we have helped people to buy safely during this disruptive pandemic.  There is no doubt that the mortgage advice sector has played a crucial part with all our partners to help people buy houses to make new homes in.  You should be rightly proud.

Robert Sinclair, AMI Chief Executive
September 2021