On 7 May 2025, the Financial Conduct Authority (FCA) published a consultation paper, CP25/11, on its Mortgage Rule Review: First steps to simplify our rules and increase flexibility.
Background
The FCA flags that various regulatory reforms since the 2008 financial crisis have improved standards across the mortgage market, including the introduction in 2023 of the Consumer Duty. It also notes that there was significant feedback on its mortgage rules in response to the July 2024 call for input on its review of requirements following the introduction of the Consumer Duty.
In light of these developments and in line with its new 5-year strategy, the FCA is reviewing its mortgage requirements through the Mortgage Rule Review (MRR).
Proposals
The first set of proposals under the MRR, set out in CP25/11, are intended to simplify some responsible lending and advice rules for mortgages so that it is easier, faster and cheaper for consumers to make certain changes to their mortgage and engage with their provider. They would also introduce options for firms that aim to promote competition in the interests of consumers and economic growth.
In particular, the FCA proposes to:
- Amend its mortgage advice and selling standards.
- Amend its affordability rules for mortgage term reductions and remortgaging.
- Retire 2 pieces of non-handbook guidance.
Next steps
The consultation closes on 4 June 2025 and the FCA aims to publish a policy statement in Q3 2025.
The next planned step under the MRR will be a discussion paper on the future of the mortgage market in June 2025, which will consider what the market needs to deliver for different consumers at different stages in their lives and for the wider UK economy, as well as the role of regulation in delivering it.