Liz Syms, CEO of Connect for Intermediaries, represents specialist brokers and provides a unique perspective on the Financial Conduct Authority’s (FCA) recent Mortgages Market Study.
This comprehensive report concludes consultations and confirms the FCA’s findings on first-charge residential mortgages. The market is generally effective but has notable shortcomings. These flaws have negatively impacted some consumers.
The regulator’s final report addresses the concerns raised in the interim report. It highlights an excessive focus on price, which was raised during consultations. This report identifies areas for improvement to make the market more effective.
The findings show clear room for improvement in first-charge residential mortgages. Liz Syms offers valuable insights into these critical aspects and highlights potential positive changes that will benefit consumers.
Specialist Brokers | Criteria clarity and lender panels
The UK mortgage market continues striving to simplify the selection process for consumers. However, the Financial Conduct Authority (FCA) has identified a critical gap in the tools available to intermediaries. While platforms like Knowledge Bank and Smartr Criteria exist, intermediaries often depend on their experience to navigate lender criteria.
Interestingly, the FCA’s analysis of mortgage transaction data from 2015-2016 highlights limited transparency in lender eligibility criteria. Despite some improvement with new tools, intermediaries still face challenges. Consumers frequently miss better mortgage deals due to hidden credit scores and loan-to-income (LTI) thresholds. This lack of disclosure prevents consumers from fully understanding their options.
The FCA’s report stresses that greater transparency in lender criteria would enable informed decision-making. Specifically, revealing key criteria could help consumers secure better mortgage deals tailored to their circumstances. Additionally, the FCA found a link between broader lender panels and improved client outcomes. This finding underscores the value of diverse lender options for intermediaries and consumers.
Moreover, the FCA points out a concerning trend among certain intermediary panels. Some prioritise serving specific consumer circumstances, such as self-employed individuals, over offering a range of lender options. This approach may limit options and reduce access to cost-effective mortgage products.
To address these challenges, the FCA calls for industry-wide collective action. It emphasises the importance of transparency in qualification information, urging lenders to disclose key criteria openly. The FCA also signals its readiness to collaborate with industry stakeholders to drive positive change. By working together, lenders and intermediaries can empower consumers to make better-informed mortgage decisions, ultimately improving outcomes across the market.
How to compare brokers
Exploring broker options involves more than just mortgage suitability. It delves into how consumers make informed choices. The Financial Conduct Authority (FCA) highlights that post-mortgage Market Review (MMR) regulations focus on suitability but overlook pricing considerations.
This regulatory approach ensures that most new mortgage sales are advised. However, while ensuring suitability, many consumers end up relying unnecessarily on advisory services. This results in borrowers sometimes missing out on cost-effective mortgage solutions, even if their current deal is suitable.
The FCA acknowledges the pivotal role of specialist brokers in influencing borrowing costs. They emphasise the importance of intermediary selection and its impact on overall expenses. Their initiative seeks to simplify comparing brokers by focusing on the size and scope of an intermediary’s lender panel. This move empowers consumers to assess if a broker offers access to a broad or narrow range of lenders.
By encouraging intermediaries to work with a wider range of lenders, the FCA aims to broaden consumer choice. The FCA plans to collaborate with the Single Financial Guidance Body (SFGB) to support this. They intend to enhance tools like the Retirement Adviser Directory, providing intermediaries with a preview of the expanded directory.
This initiative strives to improve the mortgage advisory process. It aims to create a landscape where consumers make better-informed decisions. Borrowers can select the most suitable broker by understanding an intermediary’s lender partnerships and product range.
The FCA hopes to increase competition among intermediaries and promote transparency in the UK mortgage market through these efforts. This approach ultimately benefits borrowers by ensuring greater access to affordable, suitable mortgage solutions.
Specialist Brokers | Mortgage prisoners and switching
The recent report sheds light on critical issues surrounding rate switching and fair treatment for struggling consumers in the UK mortgage market.
Approximately 10% of borrowers could access better deals but remain inactive, thereby missing out on money-saving opportunities. Despite this, some lenders exploit this inactivity, targeting specific clients with tailored rate-switch offers. These offers often target customers who are likely to consider switching lenders. To address this, the FCA plans to carry out further detailed investigations.
A particularly concerning aspect of the report is the plight of ‘mortgage prisoners.’ This group, estimated at around 150,000 individuals, faces unique challenges. They consistently meet their current payment obligations, yet cannot secure better deals. This limitation arises because they are tied to inactive or unauthorised lenders and struggle to meet strict post-mortgage Market Review (MMR) criteria.
This scenario underlines the urgent need for a comprehensive strategy. Such an approach should prioritise fairness and accessibility, ensuring the mortgage market works equitably for all borrowers. Addressing mortgage prisoners’ challenges remains a key priority for creating a more inclusive system.
By recognising these issues and implementing necessary reforms, the UK mortgage market can move closer to ensuring fairness and long-term sustainability for consumers.
Specialist Brokers | Food for thought
The Financial Conduct Authority (FCA) remains committed to easing the transition for customers who no longer need to borrow. The FCA actively invites feedback on proposed updates to responsible lending regulations in line with this goal.
The finalised regulatory framework is expected to align with forthcoming industry shifts. A unified registry of advisers is becoming increasingly essential for maintaining transparency and efficiency within the sector. Furthermore, the report urges intermediaries to evaluate how these changes might affect their business models and lender panel decisions.
Importantly, this initiative underscores the industry’s ability to adapt to clients’ evolving financial needs. The FCA highlights the necessity of ongoing innovation to ensure seamless and effective service delivery in the mortgage market.
As the FCA continues to refine these changes, stakeholders should closely monitor their potential impact. Businesses must reflect on how the adjustments influence their operational practices and strategic partnerships. This development allows organisations to review their current strategies and embrace a forward-thinking outlook.
By prioritising adaptability and collaboration, the financial sector can remain well-positioned to navigate these regulatory updates successfully. This proactive approach will benefit businesses and ensure better outcomes for customers across the UK mortgage market.
Thank you for reading our publication “Specialist Brokers | The FCA Mortgages Market Study.” Stay “Connect“-ed for more updates soon!
FAQ | Specialist Brokers
| Question | Answer |
|---|---|
| What does a “specialist broker” mean within the Connect network? | A specialist broker handles complex or non-standard cases such as self-employed applicants, large loans, bridging finance, commercial lending or clients with adverse credit. At Connect, our specialist brokers benefit from an extensive lender panel and tailored support. |
| Why choose a specialist broker rather than a standard mortgage adviser? | Standard advisers are equipped for typical residential cases. A specialist broker adds value when your application involves unusual income structures, international clients, buy-to-let portfolios, or bridging finance. They bring the knowledge and lender access needed for more challenging cases. |
| What types of specialist mortgages can Connect’s brokers help with? | Our specialist brokers are experienced in cases including: buy-to-let, portfolio landlords, contractor and freelance income, limited company mortgages, bridging finance, commercial property mortgages, and adverse credit or complex affordability scenarios. |
| How wide is the lender panel available for specialist cases? | Connect’s network offers one of the broadest lender panels in the UK, including high-street lenders, specialist underwriters and niche finance providers. This breadth supports our specialist brokers in finding the right product for each unique case. |
| Is there extra support for brokers working within the specialist category? | Yes. Brokers joining Connect receive dedicated training, compliance and underwriting support, and access to our technology platform that streamlines documentation and case tracking. We equip brokers to operate confidently with specialist cases. |
| Can a specialist broker assist with both protection and mortgage advice? | Absolutely. Many of our specialist brokers also provide protection and insurance advice. They understand the links between lending and protection products and can structure the whole-client solution accordingly. |
| How do I know if my case requires a specialist broker? | Suppose your mortgage scenario includes one or more of the following: non-standard income, self-employment, high loan-to-income, multiple properties, bridging or development finance, or you believe your credit profile will present additional hurdles. You should choose a specialist broker. You can discuss your case with our team to assess whether specialist support is appropriate. |