The Financial Conduct Authority (FCA) announced a “Call for Input” (CFI) today regarding the massive mortgage industry in the UK. The FCA is seeking input from interested parties to “identify potential areas where competition may not be working well and could be improved”. The FCA views competitive markets as intrinsically more efficient.
The FCA has been keen to support disruptive finance and is joined by few other governmental regimes in the world in this posture. The FCA states;
“We have a particular interest in the scope for newer types of funding models, such as peer-to-peer lending or crowdfunding, to overcome the constraints potentially imposed by other (more traditional) funding models.”
Director of Strategy & Competition at the FCA, Chris Woolard commented as part of the announcement of the CFI;
“For millions of consumers a mortgage is one of the biggest, if not the biggest, financial transaction they will enter into in their lifetime. The mortgage sector also plays a vital role in the financial services industry and many areas of the economy. Competition can play a key role in ensuring that the sector works well, delivering consumer benefits through lower prices, better customer service, and more product choice.
We are seeking stakeholders’ views on competition in the mortgage sector. These views, together with evidence from the FCA’s wider programme of work on mortgages, will help inform any future FCA work on this key sector of the economy, including any future competition market study.”
The FCA outlined the factors, either regulated or not, that may impact competition;
- The regulatory regime (including changes introduced following the Mortgage Market Review), and any other barriers to entry, expansion or innovation.
- Consumers’ ability to effectively access, assess and act on information about mortgage products and services; and
- Firms’ conduct and relationships.
The CFI is but a first step in the process of improving competition. The information garnered will help guide and future market study. The mortgage credit markets play a “vital role in the UK economy”. Typically it is the largest financial transaction most people experience during their lifetime. The FCA believes it is vital for the UK economy this market operates efficiently.
The CFI closes on December 18th with a summary statement, along with responses, to be published in Q1 of 2016.
The CFI is embedded below.
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