By Jonathan Davidson, Director of Supervision at the Financial Conduct Authority (FCA).
I was delighted to speak at the BSA annual conference. Building societies play an important role in a sector of vital importance to the UK, and the ethic of mutuality resonates well with the role that many building societies play in innovating to meet the diverse needs of consumers.
Building Societies, like all firms, face many strategic questions and challenges, such as digitisation, the growth ambitions of challenger banks coupled with the presence of large competitors benefiting from economies of scale, not to mention regulatory interventions.
Our interventions in the mortgage sector currently focus on two big themes - affordability and competition.
We want consumers to get mortgages they can afford, and to be treated fairly if they get into financial difficulty. The good news is that our Responsible Lending Review
found that on the whole lenders are maintaining responsible lending standards.
Of course, the real test will come when competition intensifies and affordability standards come under pressure. It will be important that lenders ensure that underwriting standards remain robust, and take sufficient steps to satisfy themselves that mortgages are affordable. This is particularly true when targeting consumers ‘under-served’ by the high street, who can have more complex circumstances.
On competition, our goal is to ensure that all firms with innovations that meet the needs of consumers have the opportunities to reach consumers and grow - and that consumers can find and buy products most suitable for their needs. These issues are central to the targeted market study that we have just announced, which we will be launching in Q4 2016.
We very much want this to be a process which makes things work well for firms as well as consumers, so we are looking forward to continuing engagement with the sector.