The FCA has published its 'Regulatory Priorities' report for mortgages, providing an overview of the areas it intends to focus on in the coming year.
The regulator confirmed that it will consult on further changes to its mortgage rules this year, noting that "there will be trade-offs as we rebalance risk, but responsible lending and high standards of conduct will remain core principles".
Since the FCA published a statement outlining the flexibility in its interest rate ‘stress test’ rule in March 2025, 85% of the market has updated its approach and is able to offer around £30,000 more.
Ensuring the quality of advice
In its report, the FCA outlined a series of areas it is focusing on in the intermediary market this year.
What it expects firms to do
• Make sure advisers recommend products that are suitable for consumers’ needs, including those who are consolidating debt or borrowing into later life.
• Test consumer outcomes across the customer journey.
• Second charge advice firms should review the findings of its work on second charge mortgages and ensure they’re delivering good outcomes. All firms providing advice should review the elements of the findings that relate to recordkeeping and quality assurance.
The FCA's work on second charge mortgages found that standards of advice could be improved, particularly for debt consolidation. Some advisers focused on assessing whether consumers were eligible for the loan, rather than whether it was suitable for their needs and circumstances.
In addition, record-keeping was sometimes incomplete, making it hard to demonstrate that advice was tailored and appropriate.
What the FCA will do this year
The regulator is communicating with the firms included in its second charge review about the remedial action it expects them to take and will continue to monitor firms through data and supervisory work.
Through the FCA's work on protecting vulnerable consumers, it is considering policy changes to support good outcomes for consumers consolidating debt.
The FCA is also exploring options to deliver more holistic advice to consumers considering using their housing wealth in later life.
The regulator says it is still seeing evidence of conditional selling - estate agents requiring consumers to use specific mortgage intermediaries. The FCA is looking at incentives, including both first and second charge firms and estate agent-based brokers.
The FCA also announced that it will work with the Treasury and the PRA to review the Senior Managers and Certification Regime.
Emad Aladhal, director of retail banking at the FCA, said: “Buying a home is one of the biggest financial decisions people make, and the value built up in the property can play an important role in people’s financial futures.
"We’re updating the rules to help more people access affordable mortgages, while supporting a market to innovate and remain resilient. Firms also have a vital role to play - designing mortgage products that meet today’s needs, supporting customers under pressure, and providing advice people can trust.”
