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* UK watchdog to study information on fees, charges
* Watchdog seeks views on crowdfunding for home loans
* FCA to report back in 2016 on possible full review (Adds detail on FCA concerns)
By Huw Jones
LONDON, Oct 7 (Reuters) - Britain's financial watchdog saidon Wednesday it has begun a review of the 1.3 trillion pound ($2trillion) mortgage market to see if there are areas wherecompetition may not be working well or could be improved.
The regulator's action comes when the British government isfacing pressure over a housing shortage in parts of the countryand rising prices have put home ownership out of the reach ofmany people.
The Financial Conduct Authority said it can be challengingfor people to compare a vast array of home loans on offer withno consistent terminology for fees and charges. There are alsoconcerns about the quality and suitability of mortgage advice.
The FCA is also looking at the impact of new rules itintroduced last year, which require tougher checks by lenders onthe ability of borrowers to pay back a loan.
"There is also anecdotal evidence, subject to much mediainterest, that some types of consumers are becoming unfairlytrapped and unable to access more suitable deals," the FCA said.
"We are keen to ascertain how prevalent this problem is, andthe extent to which the regulatory regime, the way in which ithas been interpreted by firms, or other factors have played arole," it added.
Lloyds, Santander UK, Barclays and Nationwide account for more than half of Britain's 7 million mortgage holders.
Conditions for granting a home loan have become stricterfollowing the financial crisis. There are fears that higherinterest rates could make it even harder for young people to buytheir first property.
Paul Smee, director general of the Council of MortgageLenders, an industry body, said the review is an opportunity tolook at the effect of regulation, as well as market practice, onlenders and their customers.
"It's also essential in delivering the kind of environmentin which reputable lenders of all shapes and sizes can thrive,"Smee said.
SEEKING VIEWS
The FCA is aiming to gather views before launching anyfull-fledged market study next year. Its review covers a widerange of home loans, including lifetime mortgages, sharedownership, buy-to-let, second charge mortgages and bridgingloans.
It will also scrutinise activities and relationships withinthe sector, such as between lenders, brokers, valuation servicesand estate agents to see if they inhibit choice.
Britain has sought to boost competition more generally inbanking but few of the new "challengers banks" offer home loansas their total deposits remain relatively small.
The FCA said it wanted to find out more about how access tofunding for mortgage lending was affecting new entrants.
"We have a particular interest in the scope for newer typesof funding models, such as peer-to-peer lending or crowdfunding,to overcome the constraints potentially imposed by other, moretraditional, funding models," the watchdog said.
The FCA, which has powers to force changes in how thecompanies it regulates behave, said it would publish a feedbackstatement in the first quarter of 2016 and set out any furtheraction.
"These views, together with evidence from the FCA's widerprogramme of work on mortgages, will help inform any future FCAwork on this key sector of the economy, including any futurecompetition market study," Christopher Woolard, FCA director ofstrategy and competition, said. ($1 = 0.6549 pounds) (Reporting by Huw Jones; Editing by Jane Merriman and KeithWeir)
