The Financial Conduct Authority (FCA) has set out its first mortgage regulatory priorities document, which aims to be a “one-stop shop” for all the regulator’s aims for the market.
The new regulatory priorities document will be published once a year and replaces more than 40 portfolio letters that the FCA previously published.
The FCA said: “They attempt to pull together all that we’re doing – whether by supervisors or in policy development. A clear, succinct one-stop shop. They should act as a guide for firms’ boards and chief executives. You should read these reports carefully, review the priorities within them – and act where you need to.”
The regulator said it had three mortgage priorities for this year.
The first is improving consumer outcomes under the Mortgage Rule Review. The main points for the FCA will be simplifying mortgage rules and helping firms broaden access to mortgages for first-time buyers and underserved consumers, boosting later life lending and innovation and protecting vulnerable consumers.
The second priority is encouraging responsible lending and supporting mortgage borrowers in financial difficulty.
The FCA said it expects firms to monitor their affordability assessments to ensure they remain appropriate and deliver good consumer outcomes, including when they are broadening access to mortgages.
The regulator singled out second charge lenders, and said they should ensure affordability assessments are robust and expenditure assessments are realistic.
The third priority is ensuring the quality of mortgage advice.
The FCA said it wants to see advisers in intermediary firms and lenders recommending products that are suitable for consumers’ needs.
Again, the FCA pointed to second charge, saying advisers should review its latest report on second charge lending and “ensure they are delivering good consumer outcomes”, particularly around record keeping and quality assurance.
The FCA added: “Importantly, we also want you to engage with us. We welcome your feedback on these reports and our approach to supervision. Share your insights, challenge our thinking, and work with us as we refine this new model.”
FCA director of retail banking Emad Aladhal 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.”
