Mortgage Advice and Selling Standards Consultation Paper 19/17

The intended proposals

The purpose of the consultation paper is for the FCA to inform you of their intended proposals and for advisers to have the opportunity to give their thoughts and comments. The proposals that the FCA are consulting on include:

  • Bringing the perimeter guidance on mortgage advice in line with retail investment guidance, through removing sales where no specific recommendation is made from the existing definition of regulated activity.
  • Removing limitations faced by customers who wish to buy a mortgage on an execution only basis.
  • Requiring advisers to explain their rationale if they do not recommend the most competitive mortgage option.

Our thoughts?

This paper continues the FCA’s series of work following the Mortgages Market Study (MMS). CP19/17 aims to make it easier for firms to present mortgage options to customers without giving them regulated advice. The FCA is attempting to make it easier for customers to use execution-only sales channels, which have previously been identified as being restrictive. The FCA’s goal with this paper is to ensure that customers have all the information they need to make an informed choice about how to purchase a mortgage and how to get the best value from any advice they are receiving.

One of the FCA’s key focus areas is ensuring that customers are being treated fairly. MMS identified that advisers were, on occasion, recommending mortgage deals which, while they met the customers’ needs and circumstances, were not the cheapest deal for the customer.

CP19/17 sets out the FCA’s requirements for advisers to explain to customers the reasons behind why a cheaper mortgage deal is not suitable for them and document the reasons for this. This should already be business as usual for the majority of you – as explaining why one mortgage deal is better than another, has been a key part of an adviser’s role for a number of years. Although, it is disappointing to see that there are still advisers in the industry who are still not doing this.

Through amending the existing perimeter guidance rules relating to mortgage advice, the FCA aims to make it clear that objective based search and filtering tools, are not necessarily giving customer advice – as the firm is not collecting information on a customer’s needs or circumstances. This proposed change would bring the mortgage advice rules in-line with the recently updated perimeter guidance on retail investments, more information on this can be found here.

Part of this year’s FCA business plan is focused on innovation, it has also recently appointed Nick Cook as its first director of innovation to provide focus upon new and up and coming innovative developments. Through removing the limitations which customers face in execution only sales, the FCA’s aim is to encourage competition and innovation in online tools and develop new ways to help customers access and understand the mortgage market. If you would like more information on the FCA’s business plan we are doing a webinar on the 7 June please click here to book your attendance.

What you should do now?

If you have any comments or suggestions about any of these proposals, the discussions for the consultation paper are open until the 7th July 2019. So, get them in by this date!

To do this you can either fill out the online response form here.

You can also:

  • Email – cp19-17@fca.org.uk
  • Or you can write to – Pippa Lane, Financial Conduct Authority, 12 Endeavour Square, London, E20 1JN.

They will consider the feedback they are given and publish the Policy Statement towards the end of 2019.

Mortgage Advice and Selling Standards Consultation Paper 19/17
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