FCA sets out its 2026 regulatory priorities for Mortgages sector

The FCA has now published its Regulatory Priorities report for the Mortgages sector

Reports such as this one will, going forward, replace the FCA’s portfolio letters, with each report outlining the FCA’s priority areas of focus for firms operating in that sector.  The reports also cover a wider assessment of previous activities in that space, a helpful summary of the FCA’s publications and speeches relevant to the sector, and a forward-looking timeline of key events.

Key focus areas

With a view to supporting consumers in a changing world, and underpinned by the Consumer Duty, the FCA's lists the following priorities:

Improving consumer outcomes under the Mortgage Rule Review - the focus is on ensuring that the market can adapt, innovate, and meet consumer needs and expectations, from first-time buyers to those in later life, with recognition that consumers are entering the mortgage market later, borrowing for longer, and repaying their mortgages into later life.  The FCA expect firms to engage with its Mortgage Rule Review and its focused later life mortgage study (H1) with the FCA expecting to publish a policy statement in H2 2026.

Encouraging responsible lending and supporting mortgage borrowers in financial difficulty - the FCA shines a spotlight on affordability assessments, appropriate forbearance and second charge lenders. This will also be part of the Mortgage Rule Review - the FCA note that there will be trade offs as risk is rebalanced, but responsible lending and high standards of conduct will remain core principles.

Ensuring the quality of advice - the FCA want to see advisers in intermediary firms and lenders recommending products that are suitable for consumers’ needs. Second charge advice firms are directed to review the findings of the FCA's work on second charge mortgages and ensure they’re delivering good outcomes. All firms providing advice should review the elements of the findings that relate to record keeping and quality assurance.

Other focus areas include:

• protecting against the disorderly failure of mortgage firms (the FCA expect firms to have adequate systems, controls, processes, policies, governance and oversight to mitigate this risk. Resilience testing and action plans should be sophisticated, detailed and tailored);
• fighting fraud;
• protecting against conflicts of interest (in particular in the case of stipulations to use specific mortgage intermediaries); and
• ensuring robust systems and controls related to appointed representatives. (with firms ensuring that they review their onboarding, monitoring, oversight and wind down plans holistically and on an ongoing basis, also ensuring advice fees are set and monitored consistently, and in line with the Consumer Duty).

The FCA's report can be found here