FCA implements first phase of Mortgage Rule Review

The FCA has taken its first steps towards simplifying mortgage rules and increasing flexibility for firms and customers under its Mortgage Rule Review, publishing PS25/11 on 22 July 2025.

PS25/11 sets out the FCA’s final rule and guidance changes relating to proposed reforms consulted on in May 2025 as part of its five-year strategy commitment to helping consumers navigate their financial lives and supporting the competitiveness of financial services (CP25/11). See our key takeaways from CP25/11 here: FCA seeks feedback on proposed mortgage reforms.

The new rules, which are permissive in nature, aim to make it easier, faster and cheaper for consumers to engage with their mortgage provider, reduce the term of their mortgage and remortgage with a new lender.

What has the FCA changed?

Having considered the 47 consultation responses received from stakeholders, the FCA has confirmed that it will proceed with the majority of the rule and guidance changes proposed in CP25/11, with two exceptions:

1. The FCA has removed the interaction trigger at MCOB 4.8A7R (3) and associated rules and guidance but will continue to require customers to make a positive election to proceed on an execution-only basis. This means that a consumer must confirm they are aware of the consequences of losing the protections of the rules on assessing suitability, and wish to proceed with an execution-only sale. This change attempts to mitigate concern from stakeholders that customers who have interactive dialogue and go on to make an execution-only sale may think they have been advised.
2. The FCA has introduced a rule that positively requires firms to consider what procedures are appropriate to identify execution-only customers for whom advice, or other customer support, may be necessary to avoid causing foreseeable harm, as part of meeting their obligations under the Duty.

To avoid further prescription and maintain focus on good customer outcomes, the FCA will not be issuing further guidance in relation to the new rules or the Consumer Duty. 

Next steps

The changes to the FCA’s rules and guidance came into force immediately on 22 July 2025. The FCA has acknowledged that firms who wish to use these rule changes will need time to implement them and so does not expect that consumers will be able to take advantage of the flexibility they provide immediately. Please do not hesitate to contact us if you would like help navigating what the new rules mean for you.

Separately, the feedback period for the next phase of the FCA’s Mortgage Rule Review, DP25/2, closes on 19 September 2025. We summarised the FCA’s efforts to strike a new balance for mortgage lending through DP25/2 in this blogpost – Striking a new balance for mortgage lending – FCA’s Mortgage Rule Review – and will continue to update you as further opportunities to contribute to the FCA’s Mortgage Rule Review arise.