FCA has published the findings of its responsible lending review into mortgage lending decisions. It found that, overall, firms have implemented responsible lending rules in line with FCA’s expectations following the mortgage market review (MMR). It noted no evidence of previous poor practices like self-certification of income or interest-only lending without a credible repayment strategy and, equally, where lending was affordable, no evidence the rules had prevented firms lending responsibly across particular groups, for example older borrowers and the self-employed. Neither did it find the new requirements had had a material effect on lending volumes. However, it thinks firms could improve their affordability assessment processes, record-keeping of lending decisions and use of exemptions from the requirements.
FCA also published its feedback statement following its call for inputs on competition in the mortgage sector. Responses noted that:
- consumers face challenges in making effective choices, particularly in assessing and acting on information about mortgage products, with intermediaries being key to the process;
- there are opportunities to make more effective use of technology in the provision of information and advice;
- commercial relationships between different players in the sector’s supply chain, in particular the use of panels, might give rise to competition concerns; and
- certain aspects of the regulatory framework might have a negative impact on competition.
- FCA will carry out further work on areas where it thinks there is the greatest scope for competition to improve consumer outcomes. It plans a targeted market study in Q4 2016 focused on consumers’ ability to make effective choices, with a view to improving how competition works in consumers’ best interests. The study will cover:
- how currently available tools meet consumers’ needs;
- the effects of changes in intermediation post-MMR; and
- the impact of panel and other commercial arrangements between lenders, brokers and other players in the mortgage supply chain.