The Association of Mortgage Intermediaries has expressed dismay at suggestions from the Financial Conduct Authority that it will “tweak MMR rules if needed” following its responsible lending review.
Robert Sinclair, chief executive of AMI, said any backtracking on Mortgage Market Review rules that require lenders to assess suitability on contract variations would be wrong as they were introduced for very good reasons.
He said: “If the FCA is seriously considering allowing lenders to waive the stricter advice rules from suitably qualified advisers when existing borrowers remortgage with their lender, brokers must be given confirmation that the adviser who recommended the original product will no longer be on the hook for that advice.
“Brokers cannot be expected to be responsible if the lender starts changing the terms of the product and the FCA lets them.
“We would need to know that advisers effectively had indemnity and lenders become fully accountable.”
His comments follow the publication of the FCA’s Responsible Lending Review into mortgage lending decisions and the Feedback Statement following the October 2015 Call for Inputs on competition in the mortgage sector.
In an interview this morning, the FCA’s director of competition Deborah Jones confirmed that the regulator is prepared to change MMR rules where there is clear evidence they are not working in the interests of customers.
She said: "We would tweak the rules if needed."
This would likely follow a market study commencing in Q4 2016 focused on “consumers’ ability to make effective choices, with a view to improving how competition works in consumers’ best interests”.
The scope of the review will seek to address:
- Do the available tools for helping consumers make choices (such as price comparison websites, best-buy tables, advice) effectively meet their needs?
- Are there any distortions because of undue focus on particular headline charges or features?
- Is there suitable provision for specific consumer segments with less common needs/circumstances (for instance, those without online access, those with greater levels of experience and understanding who have lesser advice needs, older borrowers needing advice across a wider product range)?
- Are there opportunities for better technological solutions?
- What is the impact of increased intermediation in the mortgage sector on consumer outcomes?
- How has the Mortgage Market Review changed the market in terms of intermediation?
- Are there differences in the outcomes for those consumers who obtain their mortgages through mortgage brokers when compared with those who go direct to lenders?
- If so, what drives those differences and is there room for improvement?
- What is the impact of panel and other commercial arrangements between lenders, brokers and other players in the mortgage supply chain?
- Is there potential for conflicts of interest or misaligned incentives?
- Do any such arrangements create barriers to entry or expansion resulting in less consumer choice?
It is understood that lenders have been lobbying the regulator to relax affordability requirements on remortgages.
Additionally, the FCA made the decision not to disclose the usual list of respondents who gave evidence in the call for inputs.
