As 2023 draws to a close and we begin to reflect on the past 12 months, some look back more fondly than others.
It certainly wasn’t an easy year for the mortgage market but, as we look forward to a new year, industry commentators share their thoughts on what has passed and their hopes for the future.
“2023 has given us plenty of things to reflect upon for the UK mortgage and financial advice sectors, with the later-life lending sector certainly feeling the effect too.
“We saw the consequences of the Mini-Budget dominate at the start of the year, then the Consumer Duty took over the airwaves, before the Financial Conduct Authority’s review of our sector proved another moment to pause and rethink.
We need to promote more comprehensive conversations for our sector, between advisers and lenders, advisers and customers
“2024 cannot be the same. From our conversations with the industry, we know that there is a huge will to make real change and we will start seeing some decisive action at the start of the new year. Advisers and lenders have all the skills and knowledge to change our sector for the better.
“The key will be finding the safer tracks that enable advisers to share this knowledge with customers. We need to promote more comprehensive conversations for our sector, between advisers and lenders, advisers and customers — equity release cannot be the answer to every question.”
“2023 has been a year full of learning for the mortgage and IFA industries, with fluctuating economic factors proving a challenge for the market and the FCA providing new guidance in the form of the Consumer Duty and its review of the later-life market.
There is much anticipation for 2024, taking all the lessons from the past 12 months and using them to evolve our sector for the better
“Financial advisers and wealth managers in particular have been under great pressure to provide solutions as customers look to them for clarity and guidance during what has been, at times, an uncertain period.
“But there is much anticipation for 2024, taking all the lessons from the past 12 months and using them to evolve our sector for the better.”
“A key milestone of the past year was the arrival of the Consumer Duty.
“Arguably, the timing couldn’t have been more apt, against a backdrop of a cost-of-living crisis, high inflation, high interest rates and stretched household budgets.
July marks the next milestone for firms as the Consumer Duty comes into effect for backbooks
“Firms hoping that the FCA would not enforce the new rules will already be bitterly disappointed, as the regulator continues to take action and identify firms that are either complacent or ill equipped to make the necessary changes. There is no doubt this will continue into 2024 and beyond.
“Making the operational and cultural changes required by the regulator will be a clear focus for firms, particularly those yet to properly assess consumer vulnerability or monitor and compare outcomes for this cohort against the resilient — a priority for the FCA.
Firms hoping that the FCA would not enforce the new rules will already be bitterly disappointed
“Looking ahead to 2024, July marks the next milestone for firms as the Consumer Duty comes into effect for backbooks — and understanding vulnerability for these customers is likely to be a much bigger challenge.
“Consumer Duty board reports will also be a priority for firms, since the FCA will use these to assess compliance.”
“Next year is going to be a very interesting time for the industry. What we all need is a period of stability and relative calm after what has been a turbulent 12 months. Whether we will get it, with a likely general election and a potential change in government, is another matter.
“But, whatever political party is next in charge, serious reform of the broken housing market is urgently needed. We need to see confidence restored in the buy-to-let market.
Whatever political party is next in charge, serious reform of the broken housing market is urgently needed
“In addition, there should be help for the many homeowners who will be coming off historically low fixed rates and moving to higher rates.
“As a result, we will no doubt see approvals for remortgaging continue to rise and affordability will still be a major challenge.”
“2023 has seen a return to a normality of sorts following the Truss/Kwarteng chaos at the end of 2022.
“As inflation has steadily fallen, and interest rate rises have peaked, the path forward for rates has become more predictable. This has allowed lenders to start to reduce rates, and indeed there has been increasing competition as lenders still need to fight for market share.
“Brokers have remained busy — maybe too busy as cases have tended to take longer and require more work, hitting profitability.
2023 has seen a return to a normality of sorts following the Truss/Kwarteng chaos at the end of 2022
“AI has of course made its mark in mortgage advice, as in so many other areas of the economy. Koodoo was quick out of the blocks to make headlines, with its AI ‘co-pilot’ passing CeMap, and MPowered, which already uses AI for document processing, answering a third of broker queries with ChatGPT.
“We can expect plenty more in this area in 2024 as AI creates a new frontier for broker productivity tools.”
“We’re optimistic that next year will deliver real progress on the digitisation of the homebuying and mortgage process, which the industry urgently needs.
“Our association has created the open data standard, and the availability of digital data, underpinned by common standards, is essential to build on our work.
We are excited about the open data pilots and data standards project
“The government’s announcement [November] of three pilot projects to explore digital solutions and improve the homebuying and -selling process heralds a clear commitment.
“We are excited about the open data pilots and data standards project.”
My aspirations for 2024 are centred around the vital improvements that will benefit not just the industry, but most importantly, our customers.
Of course, the industry will be hoping for increased stability in mortgage rates, which will be vital to revitalising the housing market. Additionally, there is a pressing need for more relief for families from the ongoing cost-of-living crisis.
There is, however, another glaring gap that demands our industry’s attention – The fact that a mere 7% of adults have critical illness or income protection. The pandemic underscored the importance of preparedness for life’s uncertainties. Therefore, it is essential that advisers step up with more education and advice in this area.
This article featured in the December 2023/January 2024 edition of MS.
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