In feedback to the Mortgage Rule Review published today, the FCA said it would move quickly to bring forward proposals to support first-time buyers and disadvantaged consumer groups in 2026.
The FCA said further exploration of challenges and solutions was needed in other areas, for example to provide more holistic advice as customers plan and make decisions about their later life finances. Policy development on all themes will start at the end of 2026 and, if necessary, continue until 2027
In its feedback report, the FCA said there was broad agreement that some potential FTB groups could be better served.
This also included those who cannot make a large deposit, lack family support, are self-employed, have irregular or contractual income, are recovering from a negative life event, have foreign assets and income, or have suffered from a credit disorder.
Responses also highlighted that people living in bonded housing, graduate students, caregivers, long-term renters, and older borrowers are groups that may be underserved.
There was consensus that change could improve access for a wider range of consumers.
Some suggestions require regulatory changes. Others could be provided within the current framework, for example by integrating new alternative data, using rental payment history or using a wider variety of income sources.
Respondents agreed that qualified advisors should review and sign off on AI-based recommendations. Human intervention was seen as essential for ensuring the adequacy of advice and consumer protection. Respondents were also concerned that customers may not fully understand AI-generated recommendations or may treat AI advice superficially.
This can lead to poor decisions, especially if consumers don’t know what questions to ask or what information is relevant. Respondents also highlighted the need for clear disclosure of how AI was used in the advice process and to ensure vulnerable clients are not disadvantaged.
Commenting on the FCA’s latest report, Quilter Financial Planning mortgage distribution director Zara Bray said:
“The FCA’s roadmap is ambitious and welcome, but it can only work in parallel with a government committed to overcoming Britain’s entrenched housing problems. Even with more flexible lending approaches, limited housing stock will remain a major drag on home ownership. Without sustained action on the supply side, the benefits of regulatory innovation will be limited, especially for first-time buyers who face intense competition for too few homes.
“That said, the regulator is right to explore more proportionate rules around high loan-to-income loans, interest-only structures and recognition of rental history. These changes could make a real difference for people who have long demonstrated affordability through high rents but remain locked out of the mortgage market.
However, a more permissive regime brings with it more complexity, and the FCA is clear that robust advice and support structures must develop in parallel to protect consumers from foreseeable harm.”
Bray added that the most notable part of the roadmap was the renewed focus on advice. “Many consumers will soon have to make choices, often for the first time, across mainstream mortgages, interest-only products and lifetime mortgage options. The FCA recognizes that the current advice landscape is too fragmented, with regulatory silos making it difficult for people to get truly holistic help on how their mortgage fits into their wider financial lives.
The intention to explore more uniform advice models and realistic affordability assessments, especially for older borrowers, is therefore a crucial step.”
Seb Murphy, director of the JLM Mortgage Services group, commented: “FS25 has some clear positives for advisers. The FCA is right to move away from enhanced advice, saying it supports holistic advice. A two-tier system would have caused real confusion and risked pushing customers down the wrong path. That decision matters.”
“There are also real opportunities here. A fresh look at late-life lending, the affordability of RIO, interest-only options and the way irregular income is handled could ensure that more customers can borrow sensibly. But all this does not make advice less important. In fact, it makes it more important.”
He added: “My concern is not what the FCA says it wants, but how this might play out in practice. Giving lenders more freedom over product design, disclosure and customer journeys should not lead to advice being treated as optional, or something that can be added later if issues arise. Talk of ‘tolerable harm’ and rebalancing risk must remain rooted in real outcomes for real people.
Murphy concluded: “If access is widened, advice standards must hold. Faster routes and more choice are fine, but they need clear signage for advice and strong checks for complex cases. Otherwise we risk repeating old mistakes, just in a more digital form.”