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Intro and overview of mortgage market and headline figures

• Welcome to the UK Finance annual mortgage lunch. Thank you all for coming today to join us.
• A lot has happened since we met last year, but one thing remains the same. The mortgages market remains central both to our economy and the work of UK Finance.
• UK Finance has over 250 members representing the breadth and depth of the banking and finance sector, from challenger banks to high-street lenders.
• We provide a single voice that is more powerful than the sum of its parts, working to champion a thriving banking and finance industry and acting in the best interests of consumers, businesses and wider society.
• And we work for and on behalf of our members, offering policy expertise, thought leadership and advocacy.
• I want to talk to you today about our top priorities for the year ahead: Brexit, competitiveness, market reforms, purpose, safety, operational resilience and adapting to technological change.
• And I will discuss how UK Finance is working to deliver added value for our mortgage members in these areas, from the treatment of vulnerable customers to the fight against fraud.
• First let's take a step back and consider the current state of the mortgage market.

First-time buyers

• Last year saw strong growth across most segments of the market. There were 370,000 first-time buyers in 2018, the highest number since in 2006. That's over 1,000 customers every day buying their first home thanks to the mortgage industry.
• This success has been boosted by schemes like Help to Buy enabling first-time buyers to get onto the housing ladder. A new phase of the scheme has been announced in England until 2023, a decision UK Finance supported. We are now pushing for clarity over extension of the Help to Buy schemes in Scotland and Wales.
• We are also calling on the government and MPs to remove the cloud of uncertainty that is hanging over consumers, businesses and the economy, by working together to agree a way forward over Brexit. This remains the first of UK Finance's priorities in the year ahead, as we seek to mitigate the impact of the UK's exit from the EU across all segments that we represent.  
• Fortunately, the mortgages industry is mostly a domestic one and should largely be insulated from the direct effects of Brexit. However, funding markets have shown some signs of tightening.
• There are also signs that the ongoing uncertainty is dampening consumer confidence in the housing market.

Competition and customer engagement is high

• Amid this uncertainty, we are seeing increasing numbers of customers locking into competitive fixed-rate deals.
• Over 475,000 borrowers remortgaged onto fixed rates in 2018. We expect even stronger growth in remortgaging this year, as more tranches of fixed-rate mortgages come to an end and customers refinance onto attractive new deals.
• This shows the mortgage market is highly competitive and customer engagement is high, a point UK Finance repeatedly makes in our conversations with government and regulators.
• That brings me on to our second priority for this year, championing the UK's competitiveness. We are calling for greater ?air traffic control? to ensure regulatory interventions are coordinated and take into account the unprecedented challenges firms are already facing in the current economic climate.

Mortgage prisoners/ Political outlook

• It's been another busy year of engagement with regulators and politicians, so thank you to Jackie Bennett and her team for all their hard work.
• In July we announced an industry-wide voluntary agreement to help borrowers on reversion rates, or so-called ?mortgage prisoners?. Alongside this, there is a need for the Government to consider the regulatory position of the thousands more customers with inactive lenders or unregulated owners that we are currently unable to help, an issue that Richard will touch upon later.
• This forms another core priority for UK Finance over the coming year, working closely with regulators and the government on market reforms that are evidence-based and deliver better outcomes for customers.
• Our policy experts have already given evidence to parliamentary committees on thorny issues including Japanese knotweed and leasehold reform.
• We started 2019 by hosting a series of highly successful mortgage member roundtables in London, Birmingham and Manchester, which I?m sure many of you will have attended.
• And we have continued our important work with members across Scotland, Northern Ireland and Wales, representing their views to devolved governments across the UK on housing policy and mortgage market issues.
• This forms part of UK Finance's political engagement with parties across the UK and across the political spectrum.
• We have a close dialogue with the shadow Treasury team and shadow housing minister, and have worked collaboratively with them to ensure the social benefits of the mortgage industry are clearly understood.
• We are also seeking to ensure any future policy changes, including proposals that aim to favour the financing of SMEs over mortgage lending, are carefully thought through.

Main section: Examples of areas where UK Finance is adding value

Helping vulnerable customers

• Across both sides of the political divide, there is a growing consensus that lenders need to respond to the needs of all society, rather than simply acting to maximise profits. 
• The stark truth is that if we are unable to demonstrate that as an industry we are willing to fulfil a broader social purpose, trust and reputation will be damaged and the sector will face political and regulatory intervention.
• So another key priority for UK Finance is to help member firms address the needs of a society as a whole, including vulnerable customers.
• As you know this has also become a major area of focus for the FCA. Steady progress has been made since the regulator launched its first report on this issue back in 2015. The Vulnerability Taskforce, chaired by Joanna Elson, CEO of the Money Advice Trust and a member of UK Finance's Board, has established nine high-level principles to improve outcomes for customers in vulnerable circumstances.
• Last year our Mortgages Product Services Board agreed to adopt these principles and there is now a specific vulnerability group for mortgage members. This means that UK Finance will be incorporating a mortgages perspective in cross-cutting responses to consultations in this area. That includes the FCA's upcoming consultation on vulnerable customers which is expected in the second quarter of this year.
• Mortgage members have also committed to implementing the industry voluntary Code of Practice that was announced last October to provide additional support to victims of financial abuse.
• And we are currently in the process of reviewing our third-party mandate guide for banking and savings products to incorporate mortgage lending. The guidance aims to help staff balance the need to protect customers from fraud with the need to provide them with continued access to an account via an appropriate person.

Economic crime, fighting fraud

• The fight against economic crime remains another core objective for UK Finance. Fraud is an issue that affects us all, and so we continue to champion cooperation across the finance industry and law enforcement to ensure the UK is the safest and most transparent financial centre in the world.
• Through our Mortgage Fraud Committee, we are also focusing specifically on the types of fraud that are of particular concern to the mortgage industry.
• In one recent case, a customer tried to remortgage her home in order to send £30,000 to a romance fraudster she had met online. Fortunately, this scam was prevented through the Banking Protocol, an initiative that allows alert local police to suspected fraud, causing an immediate response to the branch.
• The scheme, developed by UK Finance with the support of National Trading Standards, has now been rolled out by all police forces across UK. £38m of fraud was prevented and 231 arrests were made thanks to this ground-breaking initiative in 2018.  We are now looking to build on this success by expanding the scheme into telephone banking.
• Another area of particular concern for the mortgage industry is invoice and mandate fraud, in which criminals target victims posing as genuine businesses claiming their bank account details have changed.
• This can include fraudsters posing as conveyancing solicitors, builders or mortgage brokers and persuading victims to transfer large sums of money, for example to complete the purchase of their home.
• Our latest figures show that £31 million was lost by personal customers to invoice scams in 2018, with an average loss per case of over £7,200. These are life-changing sums of money that can have a devastating impact on victims.
• Through our Take Five to Stop Fraud campaign, we are helping raise awareness amongst customers of how to protect themselves from these kinds of scams. That includes always being suspicious of emails received out of the blue and checking directly with a company on the phone or in person before making a large transfer.
• Through UK Finance's Financial Fraud Bureau, intelligence is also regularly shared across the industry and with police. This unique information-sharing hub also alerts member firms to any known compromises of account details that have occurred as a result of data breaches, which we know have become a major driver of fraud.

Digital

• As fraud moves increasingly online, it is crucial that we improve defences against the threat of cybercrime.
• So another key priority for UK Finance is to improve operational resilience across the sector.
• Throughout this year, we will be redoubling efforts to collaborate in this critical area through the development of the Financial Sector Cyber Collaboration Centre.
• The FSCCC will bring the industry together to address cyber threats as they emerge, in a faster, more coordinated and effective way.
• Coordinating across firms, the government and law enforcement in this way will improve the industry's ability to detect, disrupt and protect against cyber threats.
• This will help to strengthen the resilience of the UK financial sector as a whole, including the mortgage industry.
• But our work in the digital space is not only about guarding against threats. It's also about helping our members make the most of the opportunities brought about by new digital technologies.
• Relative to other businesses, consumers tend to trust financial services firms with their personal data. Improving data analysis capabilities will make it easier to develop new products and services tailored to particular customers.
• But care will be needed to ensure that current levels of trust are maintained and enhanced, which will require careful application of new data protection rules. This is an issue UK Finance is helping members with, by helping them work through ongoing rounds of GDPR guidance and how to apply them to challenging areas, such as the protection of vulnerable customers.
• But maintaining trust will also require an ethical approach that goes beyond simple compliance with the rules, particularly as technology can outpace regulation.
• We are helping members develop their thinking in this area, for example through a recent paper setting out guiding principles for the ethical use of customer data.
• This is part of our seventh and final priority for the year, helping members adapt and make the most of technological changes.

Conclusion

• Mitigating the impact of Brexit. Improving competitiveness and ensuring market reforms are evidence-based.
• Meeting the needs of vulnerable customers and tackling the criminal gangs behind fraud. And boosting operational resilience while harnessing digital innovation.
• Across all these areas and more, UK Finance is delivering added value to our members through close collaboration and providing a deep pool of expertise they can draw upon.
• We are making sure the voice of the mortgages industry is heard loud and clear in Westminster and across the nations of the UK. And we are incorporating input from mortgage members in our responses to cross-cutting consultations.
• As we look ahead to another busy year, we want to build on these successes and continue making the most of synergies between work of the mortgages team and other policy areas.
• I will now hand over to Richard Rowntree, the new Chair of our Mortgages PSB, who will speak in more detail on some of the key policy issues facing the sector in the months ahead.