Last week the Financial Conduct Authority published its thematic review into the impact of the Mortgage Market Review (MMR) – a major series of reforms, introduced early in 2014, focused on increasing the extent and quality of sales advice offered to mortgage applicants by firms and brokers.

As part of the wide-ranging review, Revealing Reality conducted deep dive research into the expectations and experiences of consumers. We conducted 40 depth interviews and six discussion groups with a broad range of successful mortgage applicants – including first-time buyers, home-movers and remortgagors – all of whom had taken out their mortgage since the introduction of the MMR reforms in April 2014.

Our detailed, real-world findings provided a powerful complement to the insights from other activities (e.g. mystery shopping), revealing important nuances in consumer experience.

While customers were broadly happy with their experiences, for example, there was nonetheless some confusion as to the exact scope of firms’ ability to offer regulated advice, with many mistakenly believing that firms were unable to offer specific product recommendations.

We also found that consumer behaviour is often distinctly short-termist. A typical trend was for customers to begin discussions with a pre-conceived monthly payment amount in mind (formulated relative to their rental payments, or budgeting discussions), with the desire to achieve this target repayment amount determining their approach to other variables (e.g. fixed rate/variable, repayment term) – even when this was not necessarily in their long-term interests.

Our findings have helped to concentrate the FCA’s mind on the need for advisors to recognise the challenges of consumer bias in the mortgage application process, and to better explain the role of regulated advice in the mortgage application process.

Our independent report is available to view both here and on the FCA’s website – where the full thematic review is also available.