Enhanced Mortgage Advice Shelved by FCA

The Financial Conduct Authority (FCA) and the finance industry has long battled with the ‘advice gap’, that is those that can access and afford financial advice abd those that cannot.  The FCA has losee programme to simplify financial advice and make it more accessble and affordable has a couple of tweaks and turns over the last few years.

Targeted Support

Only last week, the FCA expanded its plans for ‘targeted support’.  From next years, financial firms will be allowed to ‘signpost’ you towards products and services (without taking on a liability for personalised advice), provided it is done generically and allow firms to make suggestions to groups of consumers with common characteristics based on “reasonable assumptions”.  A phrase you will likely see more often is “people like you might benefit” from X,Y or Z.

See Targeted Support

Enhanced Advice

This week, it is the turn of mortgages.  We already know that the FCA is looking to simplify access to mortgages and guidance on the same using AI to help you select a mortgage without incurring large advice/boker fees but there will always be the diffculty of first time buyers with no track record or those with poor credit histories or people that are considered ‘vulnerable adults’ when seeking equity release and lifetime mortgage help.  These areas were to be deemed ‘Enhanced Advice’ areas and therefore, perhaps not suitable for ‘targeted support’. 

In a communique this week, the FCA has admitted that “the idea to consider introducing an enhanced level of advice for specific borrowers was met with caution”.  As such, this has now been abandoned in favour of a holistic approach, in other works, targeted support.

Comment

There will always be a need for mortgage advice and thus, the idea of having yet another tier of ‘enhanced advice;’ for mortgages seemed strange.  Adviser/Brokers can only offer mortgage or equity release advice if they have specialist mortgage and/or equity release qualifications i.e., we already have ‘enhanced advice’.  Holistic advice, i.e., financial advice at a higher ‘generic’ level alongside AI and/or mortgage search services are already adequate.