2016年-FCA英国金融行为监管局_ms16_02_1_23页_412kb

Mortgage Market Study Summary (MS16/2)

Core Content

The Financial Conduct Authority (FCA) is conducting a market study on the mortgage sector to evaluate whether competition is working effectively for the benefit of consumers. The study is grounded in the UK and EU regulatory framework and aims to identify areas where competition could be improved, particularly in relation to consumer decision-making and commercial arrangements in the sector.

Main Questions

The market study will focus on two broad questions:

1. Do the available tools (including advice) help mortgage consumers make effective decisions at each stage of the consumer journey?

   • This includes evaluating the usefulness of tools such as price comparison websites (PCWs), best buy tables (BBTs), mortgage calculators, and advice from lenders or brokers.
   • The study will also consider how digital processes affect consumer decision-making and whether they enhance or pose risks to consumer outcomes.

2. Do commercial arrangements between lenders, brokers, and other players in the mortgage supply chain lead to conflicts of interest or misaligned incentives to the detriment of consumers?

   • This includes examining the impact of panel arrangements, procurement fees, and other inducements on consumer choice and the competitiveness of the market.
   • The study will also assess the role of intermediation and the influence of distribution channels on consumer outcomes.

Key Topics and Issues

Product Scope

• The study will focus on first charge residential mortgages, which are the most significant and widely used type of mortgage in the UK.
• Reasons for this focus include:
  • Most comments from the Call for Inputs (Cfl) were related to this market.
  • It is the largest segment of the mortgage market, and any issues here have broader implications.
  • The dynamics of this market differ from other segments such as buy-to-let, commercial, and second charge mortgages.

Transaction Scope

• The study includes:
  • New mortgages for house purchase (including ported products)
  • Remortgage (new lender)
  • Internal product switch (same lender)
  • Further advance
  • Equity release – lifetime mortgage
• Excludes:
  • Buy-to-let mortgages
  • Second charge mortgages
  • Commercial mortgages
  • Home reversion mortgages
  • Variations of terms for first charge residential mortgages (other than product switches)

Consumer Journey

• The study will examine the entire consumer journey, from initial mortgage inquiries to the purchase and subsequent remortgaging or switching.
• It includes the role of all firms that influence consumer decisions, whether or not they are regulated, such as estate agents, developers, and ancillary service providers.

Tools and Decision-Making

• Tools such as PCWs, BBTs, and mortgage calculators are critical for consumer decision-making.
• Potential issues include:
  • Consumer awareness and use of tools: Some consumers may not be aware of or may not use these tools effectively due to limited financial literacy or behavioral biases.
  • Behavioral biases: Consumers may focus on short-term costs, be overly optimistic, or exhibit inertia, which can affect their ability to make informed decisions.
  • Tool limitations: Tools may not fully address product complexity or biases, and may fail to prompt consumers to shop around or switch products.

Advice and Intermediation

• The FCA is interested in the value of advice and how it influences consumer outcomes.
• Questions include:
  • How do consumers perceive the value of advice?
  • What is the impact of advice on outcomes for different types of consumers?
  • How do intermediaries (such as brokers) contribute to consumer decision-making, and how do they differ from lenders?

Regulatory Impact

• The study will assess the impact of the Mortgage Market Review (MMR) and other regulations on the sector.
• It will evaluate whether regulations have:
  • Encouraged or hindered innovation in mortgage products and services.
  • Created unnecessary costs or reduced consumer choice.
  • Influenced the behavior of firms and intermediaries in ways that may not be in the best interest of consumers.

Commercial Arrangements

• The FCA is concerned about the potential for conflicts of interest and misaligned incentives arising from commercial relationships.
• This includes:
  • Procurement fees: Payments from lenders to brokers may incentivize certain product recommendations.
  • Panel arrangements: These may limit the number of lenders available to consumers.
  • Inducements to third parties: Such as PCWs, may affect consumer choice and transparency.
• The study will also explore how these arrangements may affect the ability of smaller or new lenders to compete effectively.

Next Steps

• The FCA will publish an interim report in summer 2017 and a final report in early 2018.
• They will gather information and data from market participants to assess the issues outlined in the Terms of Reference.
• The FCA may:
  • Intervene through rule-making, firm-specific remedies, or enforcement action.
  • Refer issues to the Competition and Markets Authority (CMA) for further investigation (known as a Market Investigation Reference or MIR).
  • Take no further action if no significant concerns are identified or if concerns are likely to be addressed by future legislation or firm actions.

Conclusion

The study aims to ensure that the mortgage market remains competitive and works in the best interests of consumers. It will examine the role of tools, the impact of advice and intermediation, and the influence of commercial arrangements on consumer outcomes. The findings will help the FCA determine whether regulatory changes or interventions are needed to improve the market.