UK FCA regulatory priorities report on mortgages

The UK Financial Conduct Authority (FCA) has published its regulatory priorities report on mortgages. These reports replace the FCA's previous portfolio letters and aim to provide a clearer and more consistent articulation of regulatory expectations.

The FCA identifies three priority areas:

• Improving consumer outcomes under its mortgage rule review by simplifying rules. Most proposals are expected to be permissive, creating opportunities for firms to operate differently. The FCA expects firms to continue to set and manage their own independent risk appetites and take responsibility for the outcomes they deliver.
• Encouraging responsible lending and supporting mortgage borrowers in financial difficulty. Second charge lenders are advised to review the findings of the FCA's recent supervisory review of second charge mortgages to ensure that their affordability assessments are robust and expenditure assessments are realistic for their customers.
• Ensuring the quality of advice. The FCA wants to see advisers in intermediary firms and lenders recommending products that are suitable for consumers' needs and testing consumer outcomes.

Other focus areas include addressing fraud, upholding operational resilience (where the FCA is expected to introduce new rules for reporting operational incidents and information on material third parties following CP24/28) and using AI.

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