The mortgage industry is positive that the Financial Conduct Authority’s Mortgage Rule Review will offer a “more inclusive and innovative mortgage market” as the consultation closes.
This discussion paper, which launched in June, was designed to create a public conversation on the future of the UK mortgage market.
It considers areas where changes may be needed to support sustainable home ownership and economic growth, and where increased flexibility could allow firms to tailor their product offerings to consumers’ needs.
These proposals are a shift to recalibrate the industry in a sensible way, and that’s ultimately good news for borrowers
As the discussion paper’s call for feedback closes today (September 19), industry members shared their thoughts on what it could achieve, sharing optimistic sentiments.
One such industry member was Capco managing principal, Michael Shand, who pointed out that, if it is done well, the reforms could pave the way for a “more inclusive and innovative mortgage market”.
“The FCA’s review of mortgage rules recognises the need for lending to adapt to current borrower profiles,” he explained.
“With more people self-employed, borrowing later in life or pursuing portfolio careers, the regulator’s proposals could make access to mortgages fairer and more practical for a diverse consumer base.
“The potential impact is significant. Simpler rules and reduced advice requirements in low-risk cases can make it easier for people to buy their first home or progress through different stages of ownership.
“Lenders also have an opportunity to use data and technology to design products that reflect modern borrowers.”
Shand was not alone in this sentiment as Canada Life UK managing director of retirement, Pete Maddern, who said that the discussion paper opens up an “important conversation” about the role that later life lending can and should play in sustaining income standards in retirement.
“The value of financial advice cannot be overstated. It empowers customers to make informed choices, plan with confidence and maximise their hard-earned savings in retirement.
“However, aspects of the current regulatory framework could be improved to ensure that advice considers all sources of wealth holistically.”
Additionally, Maddern recounted Canada Life’s response to the paper in which it called on the FCA to consult on a reshape of the regulatory framework so that it better aligns with customer needs rather than being restricted by product categories.
“A significant step forward would be to equip advisers with the right qualifications and knowledge to consider all sources of wealth in retirement planning,” he said.
Swinging the pendulum
Meanwhile, Coventry for Intermediaries head of intermediary relationships, Jonathan Stinton, said that it was heartening to see the regulator recognising that the pendulum “may have swung too far” since 2008, and that a more balanced approach is needed.
“These proposals are a shift to recalibrate the industry in a sensible way, and that’s ultimately good news for borrowers,” he said.
“Revisiting the approach to remortgaging could make it far more accessible, and giving borrowers easier access to interest-only and part-and-part options means they can better adapt to life’s ups and downs — whether that’s fluctuating income or planning for later life.”
Despite the changes, brokers will remain central to helping clients make sense of their options, he explained.
“Their role in guiding people through product transfers, remortgages and all the complexity in between is essential.
“By helping borrowers navigate these changes, brokers can make sure people don’t just access products more easily, but they’re choosing options which truly support their long-term goals.”
tom.dunstan@ft.com
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