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AMI has called for the FCA to issue a separate consultation on disclosure requirements. Let’ s be mindful of oversimplification of mandated documentation, as it could risk diminishing the advice process and create an opportunity for easier implementation of execution only or AI assisted models.
A mortgage is often the largest financial transaction an individual will make, and without sufficient friction in the process there is a real risk of poor consumer outcomes. AMI is therefore lobbying for stronger execution-only disclosures. We have gathered real-world examples where customers believed they were receiving advice because they dealt with someone titled a‘ mortgage adviser’ or‘ mortgage specialist,’ when in reality the transaction was execution-only. In a post – Consumer Duty environment, it is vital that mortgage rules and guidance in MCOB align with the
A mortgage is often the largest financial transaction an individual will make, and without sufficient friction in the process there is a real risk of poor consumer outcomes
Consumer Duty framework on consumer understanding. We also see value in a‘ shopping around’ style disclosure – similar to those used in home and motor insurance renewals – that would prompt customers who have remained with the same lender for a number of years to consider whether more competitive options are available elsewhere.
However, there are certain proposals in the discussion paper AMI fundamentally disagrees with.
The FCA floats the concept of enhanced advice, essentially creating a two-tier advice model. AMI has argued that most borrowers already have a layer of complexity in their circumstances, especially following the Covid pandemic and the costof-living crisis, and advisers tailor their advice accordingly. Mortgage decisions are inherently complex and consumers need trusted, consistent advice and guidance. A two-tier advice system risks confusion, poor consumer outcomes and a race to the bottom.
Another area where we strongly disagree is AI-assisted advice. While AI has potential to support the mortgage process – handling tasks such as product eligibility assessments and fraud detection – it should be viewed like stabilisers on a bike: a guide that creates efficiencies, but with the rider still firmly in control. AI should not be embedded so deeply in a business that it becomes difficult to unwind. We also must avoid running before we can walk, as it is easy to be dazzled by the latest tech solution. AMI’ s position is that AI should be treated as a tool to support advisers, not as a solution in itself, and certainly not as a replacement for advice.
Given the crucial role advisers play in identifying additional needs, it is disappointing that the FCA paper only briefly mentions protection in the context of mortgages. AMI’ s Viewpoint research shows that a house purchase remains a key trigger for protection sales. Since consumer understanding and awareness of protection products is generally low, a conversation linked to a mortgage can often prompt recognition of need, even if the purchase occurs later. The FCA’ s acknowledgment of the widening protection gap in its market study, without making a stronger connection in the mortgages discussion paper, underscores the importance of FCA departments working collaboratively rather than in siloes.
BROADER GUIDANCE & SUPPORT
It is important that policymakers recognise advice goes far beyond simply helping a customer choose a suitable product. It encompasses offering broader guidance and support through what is often an unfamiliar process; challenging assumptions even when this may be uncomfortable; identifying additional needs such as protection and GI; creating an environment where customers feel safe to disclose vulnerable circumstances; and tailoring support to the individual, among many other aspects. AMI has been amplifying the role of advice through all its discussions. We have also seen a notable shift in the regulator’ s language, compared with the earlier Mortgage Rule Review consultation, towards recognising the critical role of advice in supporting sustainable home ownership.
As the FCA’ s work continues, AMI encourages firm owners and advisers to make their voices heard. Membership of a trade body like AMI offers an impartial and independent forum to share insights and ensure your perspectives are fed into upcoming consultations. We will keep monitoring developments, collaborate closely with other stakeholders, and continue to advocate for the vital role of advice.
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