On 29 October 2020, the UK Financial Conduct Authority published a ‘Dear CEO’ letter to mortgage intermediaries. The FCA says the “market is working well but there are potential harms“.
The letter also says:
– the FCA will prioritise its focus for supervision work on the second charge and lifetime mortgages markets;
– for second charge lending, the FCA will review the suitability of advice, if customers are getting a product that meets their needs and if customers have understood the product and are being treated fairly;
– for lifetime mortgages, the FCA has three areas of concern: (a) personalisation of advice, (b) insufficient challenging of customer assumptions and (c) a lack of evidence to support to suitability of the advice.
– mortgage fraud is an inherent risk within the sector (and firms should be alive to such risks);
– firms should be aware of cyber risks;
– firms should have appropriate oversight in place for all advisers, including appointed representatives;
– there should be appropriate oversight of trading names; and
– firms should consider the impact of Brexit.
The FCA plans to write to firms in December 2021 with an updated view on the risks posed by mortgage intermediaries.