Looking for scintillating letters of recommendation

11 Mar 2020

If you’re Andrew Bailey, just about to start your stint as the new Governor of the Bank of England, and you’re looking for scintillating letters of recommendation then it would probably best to avoid the recent report published by the Treasury Committee into your tenure as chief executive of the FCA.

Indeed, if Bailey was hoping to skip over to Threadneedle Street with a roaring endorsement from MPs then he is likely to be seriously disappointed by the reaction he has got; the report expresses ‘serious concerns’ about the regulator (and Bailey’s time in charge) in particular its culture, transparency and the speed to which it works to address harm in the market.

On top of this, it also grilled Bailey about suggestions there was a culture of bullying and harassment at the FCA, a ‘record level of complaints’ from employees, and that it did not take the mental health concerns of its staff seriously.

You would be hard pressed to suggest therefore that Bailey leaves the regulator in a better place than he found it, although of course he has defended himself and his time at the helm.

Given the recent regulatory intervention in the mortgage market, it is interesting to read the thoughts of MPs on how the FCA addresses ‘harm’ and the speed (or otherwise) it moved in order to take action.

It has long been a complaint of the regulator that it is far too benign and reactive, rather than pre-empting issues before they arise.

In the mortgage industry at least, this approach to harm and what might increase or reduce potential harm is most pertinent given recent regulatory action. Indeed, there are many (including myself) who fear the most recent Policy Statement actually injects a far greater level of potential harm into the market than it proposes to take out.

There is always a lot of talk about minimising consumer detriment/harm so it has perhaps surprised us all to see the FCA pursue a course which might actually involve far greater risk for mortgage borrowers – notably encouraging an environment which might deliver more execution-only business.

Described last year as ‘inherently riskier’ than opting to take advice, you can’t help but wonder the thought processes that have gone into these rule changes, which quite blatantly, will mean that borrowers will be encouraged and pushed down execution-only channels where the likelihood of them choosing an inappropriate product will be greatly enhanced.

If we are to take the Treasury Committee’s report at face value, perhaps the FCA need to start preparing now for what might be an inevitable spike in the number of borrowers getting the wrong mortgage, and the subsequent increase in complaints.

The problem being of course that execution-only offers no protection to consumers in terms of either recourse to the Ombudsman or the Compensation Scheme. Until, of course, the former rules otherwise, and the industry ends up having to pay through the latter.

And, in other areas, perhaps most notably that of the plight of ‘mortgage prisoners’, can we truly say that the regulator has acted in the best interests of those consumers who are left unable to remortgage or secure a better rate, for no fault of their own?

Even the industry-led solutions that have been put forward are unlikely to help the vast majority of borrowers in such a position, and one isn’t able to see a forthcoming and wide-ranging solution that helps them in the near future either.

It’s a very sad period in the history of the mortgage market and one can’t help feel that with some foresight and some regulatory-backed action, it could have (for the most part) been completely unavoidable.

Andrew Bailey’s successor at the FCA, Christopher Woolard, is currently only the Interim Chief Executive, which might leave you wondering if he needs to prove himself and write some wrongs before being given the role permanently.

Certainly, he will need to secure far greater backing from the Select Committee than Baily has, and to that end, one might wonder (and perhaps hope) whether he is able to turn the ship around and tackle some of the key complaints made against his predecessor.

Whether that involves relooking at key policy areas and determining whether they truly meet the needs of consumers is up for debate. We can but hope. What we do however know is that Bailey’s influence over financial services and the UK economy has only grown. It will be interesting to see if he can shake off this criticism in his new role or if it comes to weigh heavily on him in the months ahead.

Bob Hunt

Blog Archive

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Brokers’ fortitude will see them through this ‘depressing and dispiriting’ situation 
10 Dec 2018

Paradigm CEO Hunt invests in mortgage switching platform Dashly 
19 Nov 2018

We should be confident despite the uncertainties 
14 Nov 2018

FCA should leave mortgage market alone until Brexit uncertainty lifts 
09 Nov 2018

Not following EU rules could benefit the market 
16 Oct 2018

Long-term fixes fail to catch on 
01 Oct 2018

Mortgage market must ensure it deals in Project Clarity 
21 Sep 2018

Advisers can help landlords get their skates on for HMO changes 
11 Sep 2018

A deeper look at the state of the UK lending market 
17 Aug 2018

Understanding product transfers 
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‘Go compare’ is not so ‘simples’ 
26 Jul 2018

It’s worth looking into later life lending 
05 Jun 2018

SVRs are a cash cow for many mortgage lenders 
04 Jun 2018

Leaving a network should be more straightforward 
08 May 2018

Not all later life customers are in the same boat 
03 May 2018

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16 Apr 2018

It’s just not cricket 
12 Apr 2018

Proc fee timescales are way off 
29 Mar 2018

Broker-lender relations have undergone a fundamental shift 
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22 Feb 2018

Product transfer: ‘Lenders might view greater adviser involvement as a problem’ 
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08 Jan 2018

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03 Nov 2015

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02 Nov 2015

The regulator’s differing interpretations of rules 
21 Oct 2015

Change is constant 
08 Oct 2015

Paradigm signs exclusive specialist lending deal with Brightstar 
06 Oct 2015

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22 Sep 2015

MCD – no grace but plenty of favours 
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Equity release success signals change in consumer perspective 
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Remortgagers play at ‘chicken or egg’ 
29 Jul 2015

BTL has closed the housing gap 
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Analysis: Writing a will can avoid a death blow 
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Industry deserves housing minister appointed to Cabinet 
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Damned if they do, damned if they don’t 
01 Jun 2015

In the Spotlight with Bob Hunt 
26 May 2015

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13 May 2015

Decisive election result could spur new build revolution 
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MMR 12 months on 
13 Apr 2015

Mind the protection gap 
09 Apr 2015

Analysis: Change status with the right support 
08 Apr 2015

Housing will be election battleground 
16 Mar 2015

Securing the specialist string to your bow 
04 Mar 2015

Interest rate direction is anyone’s guess 
04 Mar 2015

Regulatory B2L change is inevitable 
12 Feb 2015

Analysis: Do your homework with relationships 
04 Feb 2015

Lenders rising to the self-employed challenge 
04 Feb 2015

The sectors to watch in 2015 
06 Jan 2015

A helping hand 
05 Jan 2015

Can a landlord be truly ‘accidental’? 
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Coming in from the cold 
05 Dec 2014

Analysis: Why distribution demands inclusion 
12 Nov 2014

HSBC’s move signals cost of branch advice still rising 
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Analysis: Broker community boosted by HSBC 
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Just when I thought I was out 
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Analysis: Owning a home is not out of reach 
03 Sep 2014

Take level 4 advice exams before the FCA steps in 
02 Sep 2014

Analysis: Get set for more BoE intervention 
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Welcome to the Twilight Zone 
11 Aug 2014

Housing policy deserves seat at top table – Bob Hunt 
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MMR is enough to slow the bubble 
09 Jul 2014

Help to Buy remains in the spotlight 
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Mixed messages risk consumer confusion - Bob Hunt 
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It’s good to talk 
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H2B a rare housing policy success 
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Watch out for European regulation by year-end 
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Ask the Experts: Will MMR cause mass application declines? 
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Brokers in the dock 
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Lenders in catch 22 situation over MMR - Bob Hunt 
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Paradigm launches protection arm 
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‘MMR Day’ may be a damp squib 
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Make sure your papers are in order 
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MMR lending slowdown could force protection bonanza 
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Countdown to MMR 
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A big year ahead for lenders 
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If the quality is same – why can’t AR & DA proc fees be equalised? 
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BoE is unlikely to be trigger-happy 
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We’re not in 2008 anymore 
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FCA cannot ignore views of smaller firms 
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Stay ahead of the regulator with CPD 
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MMR compliance underpins success 
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Advisers should step up to level 4 qualifications 
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Bank of England must follow words with actions 
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Steady as she goes is the right approach 
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Now is not the time for procrastination 
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