On 7 May 2019, the FCA published Consultation Paper 19/17: Consultation on mortgage advice and selling standards (CP19/17).

In CP19/17 the FCA sets out proposed changes in its mortgage advice and selling standards to address three harms identified through the FCA’s Mortgages Market Study:

  • the FCA’s advice rules and guidance are a barrier to the development of tools to help consumers choose and buy a mortgage;
  • consumers who would like to buy a mortgage on an execution-only basis find it hard because they are diverted to advice and because execution-only sales channels are not always easy to use; and
  • many consumers are overpaying for their mortgages, even when they get advice.

To address the above, the FCA is proposing to:

  • change its Perimeter Guidance on mortgage advice to more closely align it to the recently updated guidance on advising on retail investment;
  • permit more interaction with customers before firms are required to give advice;
  • make other changes that may help firms making their execution-only sales channels easier to use;
  • require advisers, if they recommend a mortgage which is not the cheapest of the mortgages that meet the customer’s needs and circumstances, to explain why they have not recommended a cheaper mortgage; and
  • make minor amendments to correct cross-references or for the purposes of a gender-neutral drafting approach in the Handbook text.

The deadline for responses to CP19/17 is 7 July 2019. The draft amendments to the Mortgages and Home Finance: Conduct of Business sourcebook and the Perimeter Guidance manual are contained in Annexes A and B of CP19/17.