The liberalisation of rules on execution-only could reshape the market over the next 10 years, prompting both lenders and brokers to attempt non-advised mortgage sales.

Speaking at a recent roundtable on the future of the mortgage market in 2030, hosted by communications consultancy MRM, MyHomeMove group distribution director Dev Malle said: “We tend to overestimate what will happen in the next two years and underestimate what will happen in the next 10 years. As a result, I would say, potentially, 50 per cent of the market in the next 10 years will be execution-only or a hybrid version of it.”

But speaking at the same event, Coreco managing director Andrew Montlake was more upbeat about advisers’ prospects.

He said: “Brokers take around 75 per cent of business now, with some lenders relying on brokers for 85 per cent. Lenders are starting to move into the tech space and that will start to take market share away from brokers.

“Brokers won’t have 75 per cent of the market, but will still have a really good future. It’s all about adapting to consumer demand, reacting to how they want to be dealt with, embracing tech rather than being scared of it, and looking after their customers better.”

In its publication of final rules on mortgage advice and selling standards late last month, the FCA said it wanted to “help firms make execution-only sales channels easier to use” and it clarified that it had no problem with firms offering lower prices to customers who opt for an execution-only service. The paper also confirmed that firms can present a range of mortgage products to clients without that constituting advice.

However, where that information is personalised or tells the customer whether or not they are eligible for a particular deal, that is likely to be classed as advice.

Independent consultant and former FCA mortgage sector manager Lynda Blackwell played an instrumental role in previous rulebook changes under the Mortgage Market Review. She feels the move towards execution-only is a step backwards.

“It is a sad day that the regulator has supported this because it definitely does not favour the customer but is undoubtedly a major victory for lenders. Unfortunately, I also think that intermediaries will be tempted to go down the execution-only route and just become distributors,” she says.

“It is win-win for lenders,” Blackwell adds. “They can save on the procuration fee, the cost of expensive in-house qualified advisers, and compliance, and they do not need to worry about redress or claims management companies.

“It is exactly the same for the broker. They are going to be tempted away from advice because it is expensive. They have got professional indemnity insurance, which is a massive burden, they have got to constantly worry about the Financial Ombudsman Service. The regulator has made a retrograde step rather than joining the 21st century and looking forward to developing technology, which would deliver fully regulated and compliant digital advice and a good customer outcome every time.”

Blackwell says the watchdog is moving away from consumer protection and is frustrated that it appears to be turning the clock back on the five-year project that was the MMR, which had cross-industry support.

She says: “Anybody who was involved in that is going to look at these changes and shake their head. I can’t help but think it is lobbying by the big six lenders that has pushed this.”

In the future Blackwell believes that lenders may focus on securing customers via their prime execution-only channel and brokers are likely to specialise in customers with more complex needs, such as the self-employed, older borrowers and those with impaired credit records.

Association of Mortgage Intermediaries chief executive Robert Sinclair believes it will be much harder than many people think to offer compliant execution-only sales under the new rules. That is because the FCA has expanded the definition of what kind of interaction is deemed to be a trigger for advice.

Sinclair says: “The regulator is saying that interaction does not have to be verbal now, it can be through technology, so it has expanded the definition rather than reduced it. That is a good thing from the point of view of protecting the consumer and for advisers.

“This is not a panacea that allows lenders to acquire new customers on an execution-only basis, because I just don’t think that will ever work. I also do not think it makes it easy for the fintechs to do execution-only, because of the advice trigger and the fact that they will at some stage have to tell the customer which product they recommend. That is advice.”

But he warns that much will depend on how the FCA decides to police these rules. On dual pricing, Sinclair says that, beyond the top six, most lenders are so dependent on intermediary sales, “why would they want to kill the goose that is laying their golden egg?”.

Ash-Ridge Private Finance director Jane King does not feel the broker market is under threat as she says so many borrowers want help with the process and struggle to go it alone online. She disapproves of dual pricing because it disincentivises advice, but believes that as a fee-free adviser she has nothing to fear from it.

She says: “I run a really tight ship. I’ve got one part-time administrator who works from home. I drive a 15-year-old car. I’ve got a nice office, but it is tiny, so I don’t have big overheads and can afford not to charge fees.”

But she says that in parts of the country where loan sizes are much smaller and proc fees are therefore lower, brokers might struggle to offer a free advice model.