What the FCA’s 2025 strategy means for mortgage advisors and the industry

As the UK’s independent financial regulator, the Financial Conduct Authority (FCA) plays a vital role in ensuring a fair and thriving financial services market for a range of industries, including the mortgage sector. 

The FCA has recently announced a new five-year strategy. This aims to deepen trust, rebalance risk, support growth, and improve lives. Mortgage advisors should be aware that this will have a significant impact on their role. The strategy will reshape the overall regulatory environment and introduce stricter compliance requirements. 

What is the FCA’s strategy

The FCA’s strategy for 2025-2030 focuses on four key priorities; becoming a smarter regulator, supporting sustained economic growth, helping consumers navigate their financial lives, and fighting financial crime.

Being a smarter regulator

The FCA aims to become more predictable, purposeful, and proportionate in its regulatory approach. It plans to become more efficient and effective by embracing technology and improving its processes. The FCA will streamline its supervisory priorities by publishing a small number of market reports once a year, detailing potential risks and opportunities. It will also be sharing more insights from its supervisory work. It will digitise and simplify authorisation processes to make it easier to apply, reduce follow up requests, and improve data collection.

Supporting sustained economic growth

To ensure the UK’s continued status as a leading financial hub, the FCA intends to foster innovation and investment. It will use more technology to help financial firms and the UK economy work better. It will also launch its first Open Finance scheme, which is designed to encourage new financial products and give consumers cheaper options, more choice, and better information.

Helping consumers navigate their financial lives

To build consumer trust and help people make informed financial choices, the FCA will ensure clear communication and encourage innovative financial products. It will also review rules to ensure they work for the future, such as reviewing mortgage affordability requirements. This will help reduce the number of people getting into financial difficulty.

Fighting financial crime

The FCA’s strategy will focus on disrupting criminal activities within the financial system, such as scams. It will also work with firms in being effective lines of defence. This includes using technology and international cooperation to combat financial crime more effectively. The FCA will ensure that consumers have the tools they need to protect themselves. 

Why is the FCA’s strategy important now?

Recent economic uncertainty, fluctuating interest rates, and affordability challenges are straining consumers and businesses alike, making the FCA’s five-year strategy particularly significant.

The UK economy is predicted to experience a modest growth of 0.9% in 2025. This figure represents a considerable downward revision from previous forecasts, primarily attributed to global instability, persistent inflation, and increasing operational expenses for businesses.

Increased interest rates have raised the cost of borrowing for households and businesses, particularly for mortgages. Consequently, affordability has declined, leading to a reduction in consumer spending. It’s harder for people, especially first-time buyers, to own a home because mortgages cost more. 

To ensure borrowers are being treated fairly and can afford their loans, the FCA plans to look at how mortgage lenders and advisors operate. 

How will the FCA support mortgage advisors?

The regulator plans to help support mortgage advisors by simplifying regulations, providing better guidance and encouraging new ways of giving advice. 

• Simplified compliance for smaller businesses: The FCA plans to simplify remortgage rules. This will allow advisors to help more clients switch easily, especially those with good credit facing affordability issues.
• Technology-driven compliance solutions: Digital compliance tools are expected to automate data collection, reporting, and record-keeping, cutting down on advisors’ administrative tasks. AI could help streamline processes by analysing large volumes of data for patterns, automatically checking client files for compliance, and guiding advisors on complex rules.
• Improving transparency in mortgage lending: The FCA will require simpler, more transparent mortgage offers. This is so consumers can easily understand what it is they are agreeing to. Mortgage advisors will play a crucial role in helping clients navigate these new mortgage deals. This will involve clearly explaining the overall cost, detailing any additional charges, and assessing the long-term affordability for the client.

What challenges will mortgage advisors face?

The FCA’s upcoming strategy for 2025 is likely to introduce new challenges and areas of responsibility for mortgage advisors. Mortgage advisors will see changes in their responsibilities, particularly regarding more thorough affordability checks and placing client interests ahead of sales targets.

More in-depth affordability assessments

Mortgage advisors will need to do more detailed checks to ensure a client can afford a mortgage. This means looking beyond income and outgoings to consider their long-term financial stability, particularly with rising interest rates and living costs. It’s crucial to ensure clients can still afford their payments, even if their circumstances change.

Prioritising client needs over sales incentives

The FCA’s Consumer Duty rules require mortgage advisors to act in their client’s best interests. This involves prioritising suitable mortgage products over any financial incentives. Mortgage advisors must demonstrate that their actions prioritise the client’s best interests by ensuring services are fair, easily comprehensible, and cost-effective.

Will there be new opportunities for mortgage advisors?

While mortgage advisors will face new challenges, there will also be opportunities to grow professionally. 

New training and qualifications

With the FCA’s focus on high-quality advice, advisors are being encouraged to upskill. This offers a chance to gain a competitive edge through better knowledge and qualifications. In a shifting market landscape, mortgage advisors must prioritise expertise and compliance, making courses such as CeMAP essential.

Market expansion for small and independent businesses

Simpler rules and a fairer market mean small mortgage businesses will be better equipped to compete with larger firms. The FCA’s 2025 strategy aims to simplify the process for independent mortgage advisors to establish and deliver bespoke services tailored to individual client needs. They can also focus on niche areas like green mortgages and buy-to-let, allowing them to stand out in the market.

Our final Thoughts

The FCA’s 2025-2030 strategy marks a major shift in how mortgage advisors operate. It focuses on greater transparency, enhanced consumer protection, and more intelligent regulation. This necessitates more thorough affordability assessments. Mortgage advisors will need to offer advice that more accurately reflects clients’ individual circumstances, shifting focus away from commission-driven sales.

At the same time, the strategy offers clear opportunities for those willing to adapt. Simpler compliance processes, digital tools, and training routes like CeMAP qualifications are key. These will allow advisors to work more efficiently, provide better advice, and grow in niche markets like green mortgages and buy-to-let.

To stay ahead and succeed in the future, mortgage advisors need to prioritise ongoing learning, embrace technology to simplify their work, and be adaptable to new regulations. By taking these steps, mortgage advisors and industry professionals can align with the FCA’s updated requirements and thrive in a market that increasingly puts clients and innovation first.