A split between lenders and brokers over the value of mortgage advice has emerged in their final submissions to the Financial Conduct Authority’s mortgage rule review.  

The Intermediary Mortgage Lenders Association says “professional mortgage advice is non-negotiable,” while the Building Societies Association argue that the use of advice in home loans “could benefit from greater flexibility”. 

Responses to the City regulator’s review closed on Friday, which promises to bring wide-ranging changes to the mortgage market. 

The FCA said, when it published the consultation in June, that its intention was to “rebalance the collective risk appetite in mortgage lending, including trade-offs and risk that this could lead to”. 

Its proposals include encouraging more first-time buyers, the self-employed and those on variable income into the market. 

The regulator will also look at barriers to shared ownership and later life lending. 

It will also study the wider use of rent-based affordability tests and ways to boost digital house buying. 

The FCA acknowledges that these changes may lift possessions from their current historical low of around 1,000 a quarter.  

However, the role of the broker is also under the spotlight. 

In an earlier May consultation paper, the FCA said it wanted to increase the use of execution-only sales for product transfers to lower borrowing costs.  

The watchdog laid out three scenarios that its proposed broker fee changes could lead to. 

Its highest case was a 7.5% fall in home loans sold by intermediaries — around 97,000 mortgages — leading to a £95.1m fall in procuration fees and a £21.4m drop in consumer charges, adding up to £116.5m in lost fees. 

The watchdog will also look at relaxing advice rules for fully-digital home loans and for more sophisticated borrowers. 

However, Imla points out that as around nine in 10 mortgages arranged via intermediaries, consumers clearly value advice. 

It says: “Any regulatory simplification must not dilute access to impartial, professional guidance. In fact, the FCA should continue to encourage advice-led journeys so customers can compare their options confidently and avoid foreseeable harm.” 

Imla executive director Kate Davies (pictured) adds: “We cautiously welcome proportionate, evidence-led steps that could help more people into homeownership where they genuinely improve outcomes. 

“But professional mortgage advice is non-negotiable. Intermediaries are central to helping consumers navigate choice, risk and affordability.  

“The UK mortgage market is broadly working well for a wide range of customers and does not need root-and-branch reform.  

“Any changes should be measured, carefully staged and developed in close consultation with industry so we widen access without undermining standards.” 

But the BSA’s submission is more supportive of the FCA’s proposals. 

BSA housing and policy manager Robin Rouwenhorst says: “We welcome the FCA’s proactive approach and agree this is a timely and necessary review, particularly as the market navigates shifting economic conditions, changing customer demographics, and increasing demand for tailored lending solutions. 

She adds: “We believe that the current advice/execution- only split could benefit from greater flexibility.  

“Options that allow more tailored support for digitally confident consumers and for scenarios where full advice may be disproportionate or unwanted are welcome.” 

Rouwenhorst points out: “Overall, we support the FCA’s ambition to ensure that mortgage regulation enables a dynamic, growing and inclusive market.  

“We urge a balanced and phased approach, allowing the recent changes to fully bed in before committing to any future changes.  

“It’s essential to prioritise changes that deliver the greatest market impact while protecting customer outcomes and ensuring alignment with broader policy objectives.”