On 30 January 2025, the Financial Conduct Authority (FCA) published a portfolio letter to mortgage intermediaries, setting out its strategy for supervising mortgage intermediaries, including current and future priority areas of supervisory focus for the next 2-year period.

The letter explains that over the next 2 years, the FCA’s key focus will be on embedding the Consumer Duty. Other areas of focus highlighted for this sector include:

  • Quality of advice and unsuitable products: The FCA emphasises the need for customers’ needs and circumstances to be at the heart of the advice process. It notes that it will review whether sufficient assessment of customer circumstances is being carried out, whether the advice given is suitable and the extent to which firms are ensuring customers understand the products available to them. It also plans to review the adequacy of firms’ systems and controls and quality assurance procedures.
  • High pressure selling and ancillary products: The FCA intends to assess how firms are identifying and managing conflicts of interest, and where it identifies that the risk of high-pressure sales is not being properly managed, it will consider appropriate regulatory tools to bring this about.
  • Excessive fees and fair value: The FCA flags that it expects firms to be able to demonstrate their products and services offer fair value, and it will continue to monitor this as part of its ongoing supervisory work.
  • Financial promotions: Firms are reminded that they should not be seeking to exploit consumers’ behavioural biases, and communications should be designed in a way that avoids foreseeable harm and aids consumer understanding. The FCA also notes that firms should consider how they can demonstrate compliance with the consumer understanding retail customer outcome, such as through testing, monitoring and adapting communications and products or processes to support good consumer outcomes. Finally, the FCA states that, having previously published guidance on financial promotions on social media, it will continue to closely monitor firms’ compliance with the financial promotion rules.

Next steps

The FCA expects CEOs to discuss the letter with their leadership team and satisfy themselves that the areas of focus set out in the letter are being addressed under the firm’s existing Consumer Duty work programmes or, if they are not, to consider how these risks may need to be addressed going forward.