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The FCA has published its
08/05/26
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What the FCA’s Mortgage Regulatory Priorities report means for mortgage lenders and intermediaries
The FCA has published its Regulatory Priorities report for the mortgages sector, setting out the areas it will focus on over the year ahead for mortgage and home finance lenders, administrators and intermediaries. The report forms part of the regulator’s new annual approach to communicating its supervisory priorities, replacing a large number of individual portfolio letters with a single, clearer point of reference for boards and senior management.
This approach reflects the FCA’s stated ambition to operate as a more predictable, purposeful and proportionate regulator, giving firms greater clarity on supervisory expectations and areas of focus.
For the mortgage market, the context is one of relative resilience. Despite sustained pressure on interest rates, arrears have remained low. However, the FCA is clear that stability alone is not enough. The market must continue to evolve to meet changing consumer needs, and firms are expected to demonstrate how they deliver good outcomes against that backdrop, with the Consumer Duty integral to how customers are treated.
The FCA also grounds this assessment in the scale of the sector, noting that around 1.3 million home purchases, remortgages and equity release transactions take place each year across a market comprising approximately 180 lenders and 5,000 intermediaries.
A market adapting to long‑term change
A central theme of the report is the FCA’s recognition that the mortgage market has changed structurally. Consumers are buying homes later in life, borrowing for longer, and increasingly managing mortgage debt alongside other financial commitments well into later life. The FCA’s Mortgage Rule Review sits at the heart of its response to these changes.
The regulator describes its objective as creating a mortgage regime that supports a dynamic, innovative market while continuing to protect consumers. This includes examining whether existing rules strike the right balance between access, competition and risk and whether firms have the flexibility they need to meet consumer needs without undermining responsible lending standards.
Improving access to the mortgage market, including for first‑time buyers and underserved or non‑standard customer groups, is an explicit driver of this work, alongside maintaining robust consumer protections.
The FCA outlines that firms are expected to engage with this work. Feedback on the Mortgage Rule Review, and on the focused market study into later‑life lending, is positioned as an important input into how the framework may evolve. For firms, this signals that the direction of travel is not fully settled, and that evidence, data and practical insight from the market will influence future policy decisions.
The regulator also shared a timeline for the later‑life lending market study expected in the first half of 2026, and potential policy proposals in the second half of the year, giving firms a clearer sense of planning horizons.
Responsible lending and support for borrowers in difficulty
Alongside enabling innovation, the FCA continues to place emphasis on responsible lending. The report highlights affordability as an area of ongoing supervisory focus, particularly as firms adapt their lending approaches to broaden access or offer new products.
Rather than framing affordability assessments as a static requirement, the FCA signals that firms should be actively monitoring whether their approaches remain appropriate and continue to deliver good consumer outcomes. This is especially relevant where economic conditions or customer profiles are changing.
Support for customers in financial difficulty also remains a priority. The FCA reiterates the importance of timely and appropriate forbearance, making clear that firms should be able to evidence how their policies operate in practice rather than just on paper. As economic pressures persist, this is an area where consistency, oversight and outcome testing are likely to attract ongoing supervisory attention. The report also underlines the FCA’s increasing reliance on data and outcomes testing to assess whether forbearance approaches are genuinely effective in practice.
Second charge lending receives particular mention within the report, with firms expected to reflect on recent supervisory work, and consider whether their affordability and expenditure assessments are sufficiently robust and realistic for the customers they serve.
Advice quality and end‑to‑end outcomes
The quality of mortgage advice is the third headline priority set out in the report. The FCA’s focus here goes beyond individual advice interactions, extending to how advice quality is overseen and assured across firms.
The regulator expects advisers to recommend products that are suitable for consumers’ needs, including in more complex scenarios such as borrowing into later life or consolidating debt. Firms providing advice are also encouraged to reflect on the FCA’s findings in relation to record‑keeping and quality assurance, and to assess whether their own frameworks are sufficient to support good outcomes consistently.
Crucially, advice quality is not treated in isolation. The report repeatedly links this priority back to the Consumer Duty, reinforcing the expectation that firms should understand and test consumer outcomes across the customer journey, rather than focusing narrowly on point‑in‑time compliance.
Wider supervisory focus areas
As with other Regulatory Priorities reports, the mortgages publication brings together several additional areas of supervisory focus. These include protecting against the disorderly failure of mortgage firms, operational resilience, fraud prevention, conflicts of interest, the use of appointed representatives (ARs), governance under the Senior Managers and Certification Regime (SMCR) and the growing role of technology and AI.
Individually, these themes may not be new. Collectively, they point to the FCA’s expectation that firms maintain strong governance, effective systems and controls and clear accountability as business models, outsourcing arrangements and technology reliance continue to evolve.
This also emphasises a more targeted, risk‑based approach to supervision – and the intention that firms demonstrating strong governance and good outcomes should experience a lower supervisory burden over time.
What this means in practice
For boards and senior leaders, the Mortgage Regulatory Priorities report is best read as a signal of supervisory direction rather than a checklist of discrete actions. The FCA is articulating where it will focus its attention, how it expects firms to balance innovation with risk and the standard of evidence it will look for when assessing whether firms are delivering good consumer outcomes.
Firms that use the report to inform targeted gap analysis, assurance activity and strategic discussion are likely to be better placed to respond proportionately, and to demonstrate that regulatory priorities are genuinely embedded within decision‑making. As the FCA itself makes clear, firms doing the right thing can expect a more predictable supervisory relationship, while those that fall short should expect faster and firmer intervention.
How TCC supports mortgage firms
At TCC, we help mortgage firms translate regulatory priorities into practical, proportionate action. From Consumer Duty assurance and advice quality reviews to governance and regulatory change readiness, we support firms in evidencing good outcomes and embedding supervisory expectations into day-to-day decision-making.
Get in touch today to learn more about how we can help your firm.