FCA must answer why it is promoting execution-only
25 Feb 2020
Despite attempts by the Financial Conduct Authority (FCA) to the contrary, there will be a lot written about its Policy Statement on ‘Mortgage advice and selling standards’ over the coming days and weeks. And on that very point, if you want to be considered a transparent organisation and one open to scrutiny, then perhaps don’t release highly important documents late on the last Friday of the month, when the UK is leaving the EU? Just a thought.
However, back to the contents of the statement...
In reading it, I couldn’t help but keep asking the
same question, over and over: Why?
Unanswered questions
Why have we got to this stage? Why has the regulator pursued the encouragement of execution-only with such apparent zeal? Why have the views, particularly of the intermediary community, been ignored?
Why would you take the market down a path that is likely to create greater consumer harm when you are supposedly trying to dial this down?
Why didn’t you consider the alternatives? Why, if you were so concerned about consumers not getting the cheapest products, did you not introduce measures which insisted on all channels presenting that information to consumers?
Why don’t you recognise the benefits that the Mortgage Market Review (MMR) has delivered and build upon them, rather than trying to break them down?
Split opinions
I could go on. What I also recognise is that we will have different opinions on this – the bigger banks and some lenders, aggregators and price comparison websites may be enthused by the opportunity this presents them. Advisers, not so much.
And I don’t have an axe to grind here. In fact, I have a personal investment in a business which, if we wished to, could go down the execution-only route and leverage these changes, perhaps you might say, even exploit them. But we won’t because we recognise the overall inherent value in consumers receiving advice and the benefits that brings them and the wider financial services space.
So, what is the regulator’s answer to the ‘why’ question? Can they answer this? Do they have a plan for the future they could share with us? Does the intermediary community not deserve this?
Off the top of my head there are perhaps two answers that we might get. Firstly, it might come back and say it’s trying to totally eradicate instances of poor advice. That, I’m afraid, is impossible.
A degree of poor advice is a feature of the market – whether that’s box-ticking clients through a retention option or taking a lazy approach. It’s a very small number doing this, but you cannot get rid of that entirely, and you certainly shouldn’t try to do this via a strategy which beats up every single adviser that is doing a quality job.
Secondly, it might have looked at the data and come to the conclusion that there is a tranche of the market, a cohort of borrowers, who are never going to take advice of any kind.
Cost as a driving factor
In moving in the direction it has, perhaps it’s hoping that by promoting execution-only at least it gets these borrowers to a point where they are getting the cheapest deal. Because we’re aware of the store it puts in consumers to have the cheapest mortgage – even if it can’t quite define ‘cheapest’ in a satisfactory manner.
And yet if that is its focus, why has it not insisted that purveyors of execution-only have to tell their customers when they are applying for a mortgage that isn’t the cheapest? That there are cheaper options available to them? There is no such requirement for execution-only.
I’m clearly putting words in the regulator’s mouth here but it’s
important that it speaks for itself and justifies its decisions.
Indeed, answering this would give us greater confidence in our regulator and a fairer understanding that allows us, as businesses, to think strategically from a more solid base, not forgetting the chance to plan and invest appropriately. Those who think this is merely the next evolutionary step in the mortgage distribution market, and we should simply put up with it, are well off kilter here.
It’s far more serious than that and the least we should all be getting from the regulator is an answer to a very simple question: Why?

Blog Archive
Supply needs to match
02 Mar 2021
Don't overlook product transfers
19 Feb 2021
Stamp duty debate a black hole
05 Feb 2021
Industry wide levy is a head scratcher
02 Feb 2021
Long-term imposter product may finally become relevant as a high LTV option
29 Jan 2021
Uncertainty continues into 2021
07 Jan 2021
Stay ahead of the fraudsters
21 Dec 2020
Industry change starts with what we do ourselves and within our businesses
11 Dec 2020
Second lockdown will keep lender resource focused on payment deferrals
09 Nov 2020
Is now the right time to add to property portfolios?
08 Sep 2020
Advisers have duty of care as fraudsters step up scam activity
17 Aug 2020
IFAs and mortgage advisers – two sides of the same coin
12 Aug 2020
Brokers need fair play from lenders in high LTV space
31 Jul 2020
Are you ready for lock-stalgia?
03 Jul 2020
Show your clients what you can do
19 Jun 2020
Specialist lenders may need end to self-cert payment holidays to survive
16 Jun 2020
Reading the signals
15 Jun 2020
Is the FCA really in this with us?
28 May 2020
Self-employed people must not be locked out of future mortgage borrowing
11 May 2020
I wish I could say the worst is over
07 Apr 2020
Looking for scintillating letters of recommendation
11 Mar 2020
FCA must answer why it is promoting execution-only
25 Feb 2020
Goodbye doesn’t have to be forever
17 Feb 2020
FCA changes could have harmful consequences
07 Feb 2020
This could be the year of economic stimulation
03 Feb 2020
Putting the cart before the horse
17 Jan 2020
The start of a new decade
15 Jan 2020
The importance of advice
12 Dec 2019
Keep in touch with clients or lose them for good
06 Dec 2019
Later life market still needs work to be fit for purpose
22 Nov 2019
Helping mortgage prisoners
04 Nov 2019
Combatting mortgage fraud
20 Sep 2019
Upping demand for green mortgages
17 Jul 2019
Tory leadership hopefuls are right to be focused on social care in later life
01 Jul 2019
Responding to political messages about the housing market
20 Jun 2019
Promoting execution-only is not treating customers fairly
10 Jun 2019
Changing regulatory permissions can be the making of your business
14 May 2019
If we don’t talk up the market, then who will?
02 May 2019
Deeper product transfer data would show lenders’ market shifts
29 Mar 2019
Mortgage Market Study inconsistencies make for frustrating read
27 Mar 2019
The relationship between lender, broker and borrower
18 Feb 2019
Advisers must not leave mainstream mortgage market to lenders
28 Jan 2019
Let’s not blow Fleet and Secure Trust Bank out of proportion
17 Jan 2019
‘Regulation should not be reworked purely to support automated advisers’
04 Jan 2019