On 31 January 2020, the FCA published Policy Statement 20/1: Mortgage advice and selling standards: feedback to CP19/17 and final rules (PS20/1). In PS20/1 the FCA will make it easier for firms to present mortgage options to customers without providing regulated advice.
In PS20/1 the FCA sets out final rules and guidance in the following ways:
- changing the Perimeter Guidance on mortgage advice to: (i) make clear that tools that allow search and filtering based on objective criteria are not necessarily giving advice; and (ii) more closely align with the regulator’s approach with recently updated guidance on advising on retail investments;
- permitting more customer interaction before firms are required to give advice;
- making other changes that may help firms make execution-only sales channels easier to use;
- requiring advisers to explain why they have not recommended a cheaper mortgage, where other products meet the customer’s needs and circumstances; and
- making minor amendments to correct cross-references or use a gender-neutral drafting approach within the Handbook.
The FCA believes that these changes will prevent consumers from being diverted to advice where the interaction does not influence purchasing decisions and encourages firms to make execution-only sales channels easier to use. Additionally, the requirement for advisers to explain why they have not recommended the cheapest suitable mortgage allows consumers to understand how price and other factors are considered in the recommendation they receive, giving them an opportunity to challenge that recommendation.
The new rules in PS20/1 came into force immediately. The FCA has included transitional provisions until 30 July 2020 to allow firms time to adapt their processes to accommodate these changes.