1 / 10

Challenges and Solutions in Mortgage Intermediary Market

Explore sources of market failure in mortgage intermediary market due to lack of transparency and reputational effects. Discover policy alternatives and solutions for better consumer protection. Dive into the impact of political changes on financial intermediation practices.

vina
Télécharger la présentation

Challenges and Solutions in Mortgage Intermediary Market

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Intermediaries in the Mortgage Market Stijn van den Broek 28 October 2004

  2. Sources of market-failure in the mortgage market • Information-asymmetries: 1. complex products 2. complex contractual terms • Lack of reputational effects

  3. Market solution • Different channels: 1. direct writing (do-it-yourself or provision of voluntary information leaflet) 2. internet (comparison-sites) 3. personal advice and intermediation

  4. Sources of market-failure in the intermediary market • lack of transparency about quality and price • lack of reputational effects • locked-in situation consumers leads to: • adverse selection (“commission-hunting”/bad advice) • moral hazard (poor after-sales service) • misselling (non-optimal advice)

  5. Market solution • Code of conduct on the provision of information on service: Gedragscode Informatieverstrekking dienstverlening Intermediair (1 Januari 2002) • Coverige (± 99%): yet still dissatisfaction among “good” intermediaries and suppliers

  6. Political context • Changes in the Act on financial intermediation: 2001 commission-refund-possibility 2002 freedom of intermediation-rewards • Financial Services Act: 1. licensing and supervision 2. duty to provide good services

  7. Misselling as a residual problem • Experiences in Engeland and the U.S.

  8. Ecorys Research • Set-up and methodology • Results

  9. Policy-alternatives • best advice • independency-label • transparency on commissions

  10. Policy-development • preconditions: 1. low administrative costs 2. low supervision costs • sector-consultation • planning (december 2004)

More Related