Editor's note: This brief was summarised by The Property AI Newsroom from a report by Mortgage Strategy. Read the original article for full details.

AMI Stresses Importance of Advice in FCA Mortgage Rule Review

The Association of Mortgage Intermediaries (AMI) has responded to the Financial Conduct Authority’s (FCA) Mortgage Rule Review consultation, highlighting the crucial role of good advice in ensuring the proposals work effectively for consumers. The FCA’s consultation, titled 'Supporting First Time Buyers and Underserved Customers (CP26/18)', outlines ways to improve access to mortgages for first-time buyers and underserved groups.

AMI described the FCA’s proposals as targeted and proportionate, rather than a return to pre-crisis practices. The association believes there is potential to responsibly rebalance lender risk appetite, broaden home ownership opportunities, and provide access to creditworthy consumers currently excluded by existing rules, while maintaining the current regulatory framework.

On repayment structures, AMI welcomed the FCA’s position that interest-only mortgages are suitable only for certain customers with credible repayment strategies. AMI also highlighted that part-and-part repayment options may offer a more balanced and sustainable choice for many consumers, reducing long-term risk while retaining flexibility.

AMI stated that the FCA’s proposals cannot be effectively implemented without advice. The association’s response emphasised the importance of advice in helping consumers understand their options, make informed decisions, and ensure the proposals are effective in practice.

Several areas requiring further clarity were identified by AMI before the proposals can be implemented with confidence. These include the need for a clear definition of 'tailored interactive dialogue', which previously had a specific regulatory meaning, and the explicit inclusion of point-of-sale credibility assessments for follow-on repayment strategies in the final rules. AMI also recommended that repayment strategies should be kept under review, with consumers receiving prompts and support at key moments, such as when a fixed-rate period ends.

AMI suggested that lenders should signpost consumers to advice when executing interest-only product transfers. The association also called for a fuller cost-benefit analysis and wider sector discussion on non-monthly payment structures, due to the current credit reference reporting system being based on monthly cycles.

AMI broadly welcomed the FCA’s proposals on retirement interest-only, credit-impaired borrowers, foreign currency loans, and regulated bridging.