Tuesday 7 May 2019 1:20 pm

City watchdog proposes mortgage shake-up to boost consumer choice

The Financial Conduct Authority (FCA) today announced changes to mortgage advice rules to try and increase choice for consumers.

The City watchdog identified a number of ways its advice rules are acting as a barrier to the development of new tools to help consumers choose and buy a mortgage and the new rules are aimed at removing these obstacles.

Read more: City watchdog says it could amend rules to rescue ‘mortgage prisoners’

Proposed changes include making it clear that tools which allow customers to search and filter mortgages are not necessarily giving advice.

It will also make clearer that some forms of interaction, such as helping customers with applications, do not require advice.

The new rules will also require mortgage advisers to explain why they have recommended a mortgage if it is not the cheapest one that meets a customers needs.

The proposals are part of a package of remedies from the FCA’s mortgages market study, which was published earlier this year and aims to encourage innovation and make it easier for consumers to find a mortgage that suits them.

Read more: Mortgage approvals fall as lending to businesses also drops

Christopher Woolard, executive director of strategy and competition at the FCA, said: “The mortgage market is working well for most customers but we have identified some areas where our rules are acting as a barrier to innovation. The changes we’ve announced today will allow firms to develop products and services which can truly meet the needs of customers.”

Jackie Bennett, director of mortgages at UK Finance, said: "This should help ensure that firms can easily provide factual information to borrowers who opt to go through the execution-only route, helping them to choose or switch product quickly and efficiently. It will also support continued innovation, particularly in digital channels.”

The FCA is consulting on the new rules until 7 July and will publish its final rules towards the end of the year.