The Financial Conduct Authority (FCA) has announced a comprehensive review of mortgage brokers in 2025, aiming to ensure that mortgage advice firms provide suitable and fair services to consumers. Here’s a more detailed summary of the key areas the FCA will be focusing on, along with examples of good practices:

Customer Circumstances and Suitability

The FCA will assess whether mortgage brokers are conducting thorough assessments of customer circumstances and providing advice that is suitable for their needs. Good Practice: Brokers should gather comprehensive information about the customer's financial situation, goals, and preferences. They should also document the rationale behind the advice given to ensure it aligns with the customer's best interests.

Customer Understanding

The review will evaluate how well mortgage brokers ensure that customers understand the products available to them. Good Practice: Brokers should use clear and simple language in their communications, provide detailed explanations of product features, risks, and benefits, and verify customer understanding through follow-up questions or quizzes.

Systems and Controls

The adequacy of firms' systems and controls, as well as their quality assurance procedures, will be reviewed to ensure consistency in advice and appropriate oversight to mitigate risks. Good Practice: Firms should implement robust internal controls, regular audits, and continuous training programs for staff to maintain high standards of advice and compliance.

Conflicts of Interest

The FCA will examine how mortgage brokers identify and manage conflicts of interest, particularly those driven by sales targets and financial incentives. Good Practice: Firms should establish clear policies to manage conflicts of interest, such as separating sales and advisory functions, and ensuring that incentive schemes do not encourage mis-selling.

Fair Value

The FCA will monitor whether firms are offering fair value for their services, including conducting holistic reviews of fees and making necessary adjustments. Good Practice: Firms should regularly review their fee structures, benchmark against competitors, and adjust fees to reflect the true value of the services provided. They should also consider removing or reducing fees for products or services that do not offer fair value.

Financial Promotions

The regulator will ensure that marketing materials prominently feature the risks of secured lending alongside the benefits and do not exploit consumers' behavioral biases. Good Practice: Firms should design marketing communications that are balanced, transparent, and provide a clear understanding of the risks and benefits of mortgage products.

High-Pressure Sales

The FCA will look into whether firms are managing the risk of high-pressure sales and will consider regulatory tools if necessary. Good Practice: Firms should implement policies to prevent high-pressure sales tactics, such as setting realistic sales targets, monitoring sales practices, and providing training to staff on ethical sales techniques.

Dormant Appointed Representatives

The review will also address issues related to dormant appointed representatives and conditional selling. Good Practice: Firms should regularly review the activities of appointed representatives, ensure they are actively engaged in regulated activities, and terminate relationships with dormant representatives to maintain compliance.

If your firm is selected the FCA are likely going to be checking documentation you hold and case files.  Get some reassurance now by having a compliqance check, be it using our Gap analysis audit tool or having a full file audit to establish if your files and documents used are compliant.