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Mortgage intermediaries expect increase in direct selling

Nearly a quarter (23%) of mortgage intermediaries expect that consumers will choose to bypass advice and arrange their mortgage directly with a lender, according to Paragon’s latest Financial Adviser Confidence Tracking (FACT) survey.

The quarterly survey comes at a time when the FCA has proposed to remove prescriptive requirements around firms’ execution-only policies.

Published in May 2018, the proposals are part of a package of remedies from the Mortgage Market Study, which aims to encourage innovation and make it easier for consumers to find the right product.


Advised mortgage sales increased from 70% to 97% of mortgage business following the Mortgage Market Review in 2014, when rules were introduced to improve clarity for consumers over whether their mortgage sale was subject to advice or not.

The FCA believes that a better balance can be achieved by raising the trigger points at which firms need to divert customers from an execution-only to an advised channel.

Among those brokers who expect the FCA proposals to lead to an increase in direct business, 44% believe the impact on their own business will be significant, while 36% think it will present a threat to the broker market. Some 55% expect the impact of the changes will be minimal.

One in seven surveyed (15%) plan to adapt their business models to accommodate the change.

The FCA’s ‘Consultation on mortgage advice and selling standards’ closed on July 7 and is expected to result in a new Policy Statement in late 2019.

John Heron, managing director of mortgages at Paragon, said: “The mortgage market is set for significant change as technological advances streamline routine processes and make inroads into product comparison and selection.”

“However, choosing a mortgage is a major financial decision and advice can be critical in helping customers look beyond the headline interest rate to understand the full cost and benefits of alternative products.”

He concluded: “Advice is also essential when arriving at an optimum solution for customers with complex requirements.”

You can view the full FACT 2019 report here.


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