The FCA’s Director of Supervision, Jonathan Davidson, has delivered a talk on Building Societies and the Future of Retail Banking at the Building Societies annual conference.
In his speech, Jonathan raised the issue of whether the historically low repossession rates was actually a concerning indication: whether forbearance should be offered in cases where the borrower has no realistic chance of getting back on track. This is particularly worthy of consideration in the context of the interest only mortgages that were entered into in the last decade. Jonathan indicated that this is an area that the FCA is currently looking at, with findings to be published later this year.
The speech also noted the role buildings societies can play in promoting competition in the market, in particular in helping customers such as first time buyers, the self-employed, retired or retiring borrowers find the best deal.
Furthermore, Jonathan discussed the ongoing work being done in relation to the perceived competitive disadvantage between building societies and banks, but noted that developments in access to and the provision of consumer financial services, in particular those arising from open banking and the second Payment Services Directive, could assist in eroding any competitive advantage the large banks may have in this respect.
The final thoughts included a call to maintain a two-way dialogue with the regulator, and in particular to consider engaging with the FCA’s innovation hub or sandbox.