On 9 May 2024, the FCA published the speech that Emily Shepperd (FCA Chief Operating Officer) gave at the Building Societies Annual Conference. The speech is entitled Building our societies through lending and savings.

Key points in the speech include:

  • A rise in longer mortgage terms has recently been witnessed – mortgages lasting longer than 30 years made up 35% of sales last year. 
  • Extending mortgage terms, while appropriate for some, is a symptom rather than a solution to today’s affordability challenge. 
  • While home ownership should be accessible to as many people as possible, lending must be responsible and in the long-term interests of the consumer.
  • The Mortgage Market Review, which came into force 10 years ago, ensured there could be no return to practices that led to a proliferation of unaffordable mortgages being offered. 
  • The FCA’s current rules provide lenders with flexibility to adapt lending criteria and design a range of mortgages. In a higher interest rate environment innovation and creativity, aligned with FCA rules and in the interest of consumers is something the regulator is open to engage with and support. The FCA’s supervisory and policy teams, alongside its Innovation Hub and Regulatory Sandbox are open to discuss any propositions. Building societies are encouraged to consider these options as part of their product design process. 
  • The proportion of mortgage customers over 67 is currently less than 2% of all loans. By 2040 this rises to 5%, and by 2050 it is almost 10%. Lending into retirement is moving from a niche to a norm. With borrowers projected to hold debt for longer, lenders should be asking themselves about the products and services they will provide to those borrowers to meet their needs responsibly and help them meet their financial goals.
  • Last year, the FCA sent out a 14-point plan to ensure banks and building societies were passing on interest rate rises to savers in a timely manner. Progress has been made in this area: in April, there were more than 300 instant access accounts paying over 3%, and more than 170 paying over 4%. But there remains room for improvement. Some firms have found the assessment of fair value challenging and the FCA will continue to work with the sector to ensure that assessments are robust and effective.
  • In July, the Consumer Duty will be applicable to closed financial services products including savings accounts. From its work with some of the larger building societies the FCA is aware that most are prepared for this deadline. The FCA has also been pleased to see building societies appoint Consumer Duty champions at the right level, with good engagement with internal audit and compliance teams.