AMI urges FCA to tackle 'unfair' MCD disclosure rules

The AMI said that banks and building societies have seen the "regulatory onus on them to disclose their terms and conditions and payment structures weaken under MCD - upfront they are permitted under European regulation to disclose orally".

Under MMR rules banks, like intermediaries, had to submit full disclosure to clients before they commenced conversations. AMI says it is "disappointed to see" that the FCA has not chosen to require lenders to continue to adopt the same stance as brokers on this point.

In its Quarterly Economic Bulletin, the AMI said:

"MMR was designed to level the playing field so that borrowers received a consistent level of service regardless of the path they chose to take when applying for a mortgage.

"We strongly urge the FCA to reconsider this rule and revert back to its much fairer and more robust disclosure rules under MMR. This is fairer to consumers on all levels."

The AMI also raised concerns that some lenders are pricing short-term fixes more competitively than longer term rates for fear of comeback from borrowers.

The Association said that in "some pockets of the market" lenders are reluctant to offer borrowers longer term stability on remortgage rates. Its members noted that building societies in particular are focusing their efforts on making shorter term fixed rates more competitive so that borrowers are less able to fix payments over five years without moving borrowers.

The AMI added:

"This appears to be a consequence of pressure on their prudential model. Whether this also reflects uncertainty or a lack of confidence to sell longer term fixed rates to borrowers remortgaging through execution-only mortgage sales is unknown."

The AMI also believes that the risk of a Bank Rate rise has "receded further into the distance" as market volatility and pressure on wage growth remains.

AMI said that it doesn't make "logical sense that it would pull the plug now and raise rates, risking the stability of an already fragile economy".