"We know many brokers are new to the opportunities that green mortgages provide. They’re not energy efficiency experts, and we don’t expect them to become so."
Every part of the housing value chain has a role to play in decarbonising the UK’s housing stock by helping borrowers to improve the energy efficiency of their homes – including mortgage lenders and brokers, the FCA has said.
During a speech delivered at the London Institute of Banking & Finance mortgage conference, the FCA's director of retail banking, David Geale, said that lenders risk missing their decarbonisation targets if they don’t evolve their support for homeowners to enhance energy efficiency, which is "one of several reasons why brokers can expect to see an increase in green mortgage products and innovation".
He added that brokers have a "key role to play in helping borrowers navigate a complex and nuanced landscape in terms of green home finance".
However, he also noted that there are various Consumer Duty considerations for ESG products centred around suitability, and "the more specific a consumer is about their requirements, the more specific a broker will need to be in the advice they give to them".
Geale continued: "Every property is different in terms of what is feasible and viable, while every borrower has different circumstances, knowledge, and abilities to pay. But we know many brokers are new to the opportunities that green mortgages provide. They’re not energy efficiency experts, and we don’t expect them to become so. There is no ‘one-size-fits-all’ answer for energy efficiency. It’s not as simple as saying ‘this measure costs X amount, and will deliver Y in reductions to your carbon emissions or energy bills’.
"And different lenders offer different types of incentive, depending on a huge range of variables. It’s not easy to compare them, especially when some products require a jump in EPC rating, while others need a specific type of energy efficiency improvement to be carried out."
Geale pointed to tools like the recently launched Broker’s Handbook by the Green Finance Institute, which he says "should give intermediaries the confidence and ability to provide additional value in their service to their clients".
He concluded that brokers will "continue to play a pivotal role in helping borrowers understand what their options are, and where to turn if they need additional support to improve the energy efficiency of their homes."
Geale said the FCA wants brokers to "be empowered to support consumers in making appropriate decisions, tailored to their expressed needs and preferences".
