Nominate Now: 30 Under 30 Stars!

Spotlight future leaders with 30 Under 30, a fantastic initiative from Financial Reporter and Working in Mortgages - make your nominations now...

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Later Life Lending Summit returns for a second year

AMI, in collaboration with the ERC, is excited to announce that the Later Life Lending Summit is back for its second year in Sheffield on 6th November...

New Consumer Credit regulatory return: updated Q&A

AMI is holding a virtual working group session with the FCA on the 15th of September to discuss the consumer credit regulatory return - have your say...

Your September 2025 industry update

AMI's September 2025 industry update; what's new across the mortgage & protection industries this month...
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Nominate Now: 30 Under 30 Stars!

Spotlight future leaders with 30 Under 30, a fantastic initiative from Financial Reporter and Working in Mortgages - make your nominations now...

AMI’s Protection Viewpoint returns for its sixth year

AMI Chair, Andrew Montlake, explains why the AMI Protection Viewpoint is a must-attend event for business owners and advisers...

Later Life Lending Summit returns for a second year

AMI, in collaboration with the ERC, is excited to announce that the Later Life Lending Summit is back for its second year in Sheffield on 6th November...

New Consumer Credit regulatory return: updated Q&A

AMI is holding a virtual working group session with the FCA on the 15th of September to discuss the consumer credit regulatory return - have your say...

Your September 2025 industry update

AMI's September 2025 industry update; what's new across the mortgage & protection industries this month...

Mortgage Sector in Focus; Stacy Penn writes for Moneyfacts

Stacy Penn, AMI Head of Policy

Head of Policy Stacy Penn writes about the evolving UK mortgage market, in the latest issue of Moneyfacts Magazine

The UK mortgage market continues to evolve, shaped by regulatory reforms, technological advances and changing customer expectations. Recent developments—particularly the FCA’s Discussion Paper DP25/2 and its follow-up to Consultation Paper CP25/11—signal a significant moment for the industry. The spotlight on the mortgage sector demonstrates the important role it plays in unlocking economic growth. As the regulator explores the future direction of the mortgage market, there is an opportunity to reflect on lessons from the past and to embrace innovation sensibly.

It’s hard to disagree with the FCA’s goal in CP25/11 of making the mortgage process quicker, easier, and simpler. There are parts of the home buying process that are ripe for change such as using AI to reduce administrative burdens, speeding up the conveyancing process and digitising parts of the home buying and selling process. However, the FCA’s proposal to remove the advice ‘interaction’ trigger, in AMI’s view, goes a step too far.

The FCA has expressed concern that the proportion of advised mortgages—currently at 97%— is too high. However, the consultation paper overlooks the role of a broker and fails to recognise that mortgage advice extends beyond simply selecting a product; it encompasses life planning, reassurance and building trust.

Removing the advice ‘interaction’ trigger therefore risks driving some customers down a digital, execution only route that could end up costing them more in the long term. Any perceived ‘savings’ from choosing an execution-only route – whether in time or money – may ultimately be eroded by the absence of an adviser’s oversight and critical judgement. Without advice, there’s a risk that consumers’ decisions today do not align with future needs. For example, a customer may later find it difficult to port their mortgage if they decide to move home or incur an early repayment charge that makes any initial ‘savings’ look miniscule in comparison. The FCA requires regulated firms to consider the role they play in avoiding causing foreseeable harm – it is equally important that the regulator upholds this principle in its own policy-making processes.

Advice also plays a key role in addressing other challenges highlighted in the FCA’s papers such as the increasing number of borrowers taking out longer-term mortgages that extend into retirement. Whilst longer term mortgages are supporting first time buyers onto the property ladder, receiving advice via regular product reviews (at the time of remortgaging) provides the opportunity for advisers to explore client’s affordability and pose alternative options to shorten the mortgage term, such as overpayments or remortgaging on a shorter term. 

There is also a genuine risk of creating inertia, where customers assume they are receiving the most competitive deal and, as a result, remain with their existing lender. This may eventually result in loyalty penalties, akin to those previously identified in the home and motor insurance sectors, where regulatory intervention led to the ban of specific practices. We must learn from the past and avoid regulatory short-sightedness.  

The FCA’s discussion paper (DP25/2) covers a broad range of topics and it is positive to see the FCA take a more balanced approach towards the role of advice, stating that ‘the proportion of advised new sales, and satisfaction with mortgage brokers and mortgage products working as expected, suggests the important role that mortgage advice continues to play’. The paper presents an opportunity for the industry to contribute ideas on expanding access to home ownership; fostering innovation; enhancing consumer understanding and reviewing disclosures; and exploring the role of holistic advice in later life lending. This discussion paper marks the beginning of the conversation, with further consultations expected as the FCA starts to gain a clearer understanding of areas that may require regulatory change.

Whilst we are supportive of the opportunity for stakeholders to come together and discuss what the mortgage market of the future should look like, AMI is concerned about the FCA’s concept of ‘enhanced advice.’ The FCA is considering whether its rules should mandate a level of ‘enhanced advice’ in specific situations, such as when consumers wish to access the equity in their homes or for certain consumer groups, product types or repayment methods. AMI cautions that requiring firms to label their service offering in this way risks stifling competition and innovation. Firms should have the freedom to exceed regulatory requirements; flexibility in service offerings is also essential for fostering a vibrant mortgage market that gives customers choice on the advice route that suits their needs, not have this dictated to them through regulation because of the type of customer they are. It is vital that mortgage advice is not brought into the advice guidance boundary review, which explores the idea of simplified advice, through another guise.

In considering the future of the mortgage market, it is equally important to reflect on the past The FCA’s 2014 Mortgage Market Review (MMR), aimed to ‘remedy poor borrowing decisions caused by consumers’ inadequate understanding or knowledge’ and to move ‘customers away from short-term decisions based on the initial monthly repayment towards understanding the consequences of a long-term borrowing commitment’. MMR introduced stricter affordability assessments and a clearer separation between advised and execution-only sales. With 97% of mortgage customers receiving advice – which supports consumer understanding and encourages longer term planning – it seems the changes implemented following the MMR have had the intended results. It therefore seems counterintuitive for the FCA to suggest proposals little over a decade later that could undo all this hard work.

In 2021 the FCA clarified how firms could provide interactive tools without straying into the regulated advice territory. Whilst some consumers prefer to research independently, most will still want the reassurance of expert input at key points in their journey. Research shows 90% of mortgage customers start their journey with an online search and 73% of UK adults used a financial comparison website in the past year, however c. 90% of mortgages are still transacted via intermediaries, which shows customers are still seeking advice.

The focus should be on developing sustainable advice models that integrate technology, such as AI, effectively, while maintaining appropriate friction points and preserving the human qualities of judgement, empathy and reassurance that are central to quality advice. Innovation must be implemented sensibly and regulation must not inadvertently restrict advice access or penalise innovation.

It is essential relevant departments within the FCA operate in a coordinated manner. Both the mortgage consultation and discussion papers fail to acknowledge the critical role that advice plays in identifying consumers’ broader financial needs, such as protection. AMI’s Viewpoint research – a detailed study involving 3,000 UK adults—demonstrates that purchasing a property is the leading trigger for buying protection. Notably, the FCA itself recognises the existence of a protection gap in its Protection Market Study Terms of Reference. A cohesive and integrated approach is therefore necessary to prevent unintended consumer detriment.

Overall, policy changes that narrow access to advice may inadvertently hinder homeownership – mortgage brokers are often the ones coaching customers, holding hands throughout the process and pushing for progress on a transaction. Remove this, and customers could be left feeling confused and isolated during what is often an unfamiliar process. Similarly, a rush toward digital-only solutions may alienate vulnerable customers who rely on human interactions and emotional support during what is a major life decision.

It is also worth recognising that change doesn’t always need to be radical; in some cases, greater clarity from the FCA on the intent behind its rules can be enough. A recent example is the FCA’s statement on the flexibility within its stress testing rules, which has prompted some lenders to boost affordability. In real terms, this has meant some first-time buyers, dependent on the lender, could potentially borrow tens of thousands of pounds more.

It is encouraging to see the FCA keen to engage with the sector and AMI will play a key part in the upcoming discussions. It is important the FCA considers feedback on both the consultation and discussion papers, as the two are interlinked. Above all, we must learn from the past. Any transformation must be underpinned by a clear commitment to delivering better outcomes for consumers. Regulation must not inadvertently restrict advice access or penalise innovation. In all this the adviser’s role should be supported, not diminished.

© 2025 Association of Mortgage Intermediaries Limited.

AMI is the trading name of The Association of Mortgage Intermediaries Limited which is a company limited by guarantee, registered in England and Wales under the Companies Acts with number 7982341. Our registered address is Celixir House, Stratford Business & Technology Park, Innovation Way, Banbury Road, Stratford-upon-Avon, Warwickshire, CV37 7GZ.

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