The Intermediary – June 2025 - Flipbook - Page 27
Duty as the guardrails to these choices. So,
However, some of these changes do require
where they're choosing to adopt the new rules,
careful planning and system updates which firms
they'll need to consider their Consumer Duty
have had to prepare for.”
obligations to ensure customers receive a
good outcome.”
However, while regulation has delivered greater
Hutchins highlights the importance of
engaging with trade bodies and staying informed
on FCA plans: “It’s really important for those
stability and protection, it has also introduced
mortgage lenders and intermediaries to engage
friction – slowing processes, increasing costs,
with their relevant trade body, to stay up to
and sometimes making it harder for consumers
date with FCA plans and to understand their
to secure deals quickly. This tension is now at
expectations around any new rules [...] there’s a
the heart of the debate about the future shape
great opportunity to help shape those rules by
of regulation.
responding to consultations.”
Regulation under review
expressed a range of views, with some welcoming
Industry groups, advisers and networks have
The FCA’s publication of CP25/11 in May 2025
the opportunity for greater efficiency, but many
marked a significant bid to simplify responsible
warning of the risk that consumer interests
lending and advice rules, making it easier for
could be undermined if advice becomes less
consumers to switch mortgages or change
accessible or if protections are weakened. Some
their terms.
Central to the proposals is the removal of
respondents have also highlighted the challenge
of ensuring that firms are given enough time to
the rule obliging lenders to recommend advice,
adapt to any changes and to update their systems,
paving the way for greater use of execution-only
processes and staff training accordingly.
sales and faster processes for those who feel
confident making their own choices.
Harpal Singh, CEO at conveybuddy, says: “On
Changing roles and risks
Across the market, people have raised concerns
the face of it, the language was framed around
about the potential risks to their roles, as well
improving consumer access, removing friction,
as to consumer outcomes. Since 2015, advice
streamlining the process. But make no mistake:
has been the norm in the vast majority of new
the proposals point directly to wanting to
mortgage sales, reflecting the value both advisers
increase execution-only mortgage sales and an
and consumers place on professional guidance in
attempt to remove advice from those cases where
a complex market.
it deems it unnecessary and expensive.”
For the regulator, this is not a retreat from
Mortgage advisers now deliver far more than
just rate comparison – they provide guidance on
Consumer Duty, but a realignment with its five-
protection, insurance, and long-term financial
year strategy, which aims to foster innovation and
stability, building relationships based on trust.
competitiveness. The FCA argues that excessive
guidance and bureaucracy can hinder both
The consultation’s emphasis on ‘flexibility’ and
‘removing friction’ has ignited fears of a return
consumers and firms, and that a streamlined
to execution-only models and a widening of the
marketplace will benefit those who are digitally
advice gap. Singh warns that these proposals
confident, while keeping support in place for
could have a “seismic impact” on advisers,
those who need more help.
However, the short consultation period – less
than a month – sparked concern across the
undermining both mortgage advice income and
long-term client relationships: “It’s the lenders
who stand to gain from more direct business,
industry about the potential consequences of
fewer broker commissions paid, and a tighter
such rapid change. Many felt the window for
grip on the customer journey.”
feedback was too narrow, given the scale of the
proposed reforms.
Faizan Haq, senior policy manager at the
While execution-only may seem “frictionless,”
Singh describes it as “risk-laden,” particularly
for those lacking the knowledge or confidence
Finance & Leasing Association (FLA), recognises
to choose suitable deals. He also notes that
both the aims and the practical demands of new
most brokers don’t charge fees and often deliver
regulatory moves. He says: “Both lenders and
greater value through advice.
intermediaries are working hard to meet new
Kate Davies, executive director at the
regulatory expectations from the FCA. Recent
Intermediary Mortgage Lenders Association
consultations, including the MMR and the next
(IMLA), stresses the importance of clear advice
steps on Consumer Duty, reflect a growing focus
triggers: “Of course borrowers should be able
on customer outcomes and fair value.
to engage with their lender to ask questions
“These are welcome aims that align with the
and clarify certain aspects about their current
industry's commitment to responsible lending.
mortgage product – but where this leads to a
p
June 2025 | The Intermediary
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