Differences between lenders and brokers on the value of mortgage consulting emerged in the final submission of their review of mortgage rules for financial conduct authorities.
The Association of Agency Mortgage Lenders said “Professional mortgage advice is not negotiable”, while the Association of Building Associations believes that the use of advice in home loans “can benefit from greater flexibility”.
The response to the city regulator review ended Friday, which is expected to bring broad changes to the mortgage market.
The FCA said in a consultation in June that its purpose is to “rebalance collective risk appetite in mortgages, including trade-offs and possible risks.”
Its proposals include encouraging more first-time buyers, self-employed people, and markets with variable income.
Regulators will also consider barriers to sharing ownership and future life loans.
It will also look at the widespread use of rent-based affordability testing and ways to increase digital home purchases.
The FCA acknowledges that these changes could put current all-time lows of about 1,000 units per quarter.
However, the role of the agent is also in the spotlight.
In an consultation paper earlier in May, the FCA said it hopes to increase the use of execution-only sales for product transfers to reduce borrowing costs.
Watchdog lists three scenarios whose proposed broker fees may result.
Its highest case was 7.5% of the home loan sold by an intermediary (about 97,000 mortgages), resulting in charges of £95.1 million and consumer fees dropped by £21.4 million, totaling up to £116.5 million in loss expenses.
Watchdogs will also provide easy advice rules for fully digital home loans and more complex borrowers.
However, IMLA noted that about 9 out of 10 mortgages arranged with intermediaries, and consumers clearly value the advice.
“No regulatory simplification can dilute the opportunity to obtain impartial, professional guidance. In fact, the FCA should continue to encourage a leading journey with advice so that customers can confidently compare their options and avoid foreseeable harm.”
IMLA Executive Director Kate Davies (pictured) added: “We are cautiously welcome comparative evidence-based measures that can help more people get into home ownership, thereby truly improving the outcome.
“But professional mortgage advice is not negotiable. Intermediaries are crucial to helping consumers navigate choices, risks and affordability.
“The UK mortgage market operates widely across a wide range of clients and does not require root and branch reform.
“Any changes should be measured in close consultation with the industry, carefully staged and developed, so we have expanded access without breaking the standards.”
But BSA’s submissions are more supportive of FCA’s recommendations.
“We welcome the FCA’s proactive approach and agree that it is a timely, necessary review, especially as markets navigate economic conditions, changes in client demographics and the increasing demand for tailored loan solutions.
She added: “We believe in the current recommendation/execution – only division can benefit from greater flexibility.
“More options for tailor-made support for digitally confident consumers are welcome, as well as scenarios that may be full of suggestions that may be disproportionate or unwanted.”
“In general, we support FCA’s ambitions to ensure mortgage regulations make dynamic, growing and inclusive markets.”
“We urge a balanced and phased approach that allows recent changes to be completely bedridden before any future changes are committed to.
“The changes that bring the greatest market impact must be prioritized while protecting customer outcomes and ensuring alignment with broader policy objectives.”
