The Financial Conduct Authority (FCA) published a consultation paper last week on mortgage advice and selling standards (CP 19/17). Considerable focus was put on the phrase in the consultation paper: ?consumers who would like to buy a mortgage on an execution-only basis find it hard because they are diverted to advice? (my emphasis). This was interpreted by some commentators as meaning the FCA moving away from the idea that the majority of people should get advice when they take out a mortgage.

Not so, in my opinion. The last major change to the rules in 2014, as a result of what was known as the Mortgage Market Review (MMR), made a very clear distinction between what was defined as ?advice? and ?execution-only?. Almost any time a lender or adviser entered into 'spoken or other interactive dialogue?, it would be deemed to be advice. This was probably the right approach at the time and followed a tightening of the rules following the credit crisis. However, the rules were introduced before the technological advances we have today were prevalent and the digital mortgage was no more than a twinkle in someone's eye.

As lenders tried to develop online solutions and simple execution-only journeys for customers, they found that the rules were not clear enough for them. They could not be confident that if they answered even factual questions from a customer, they would not be falling foul of the rules since they were interacting with the customer. This was also proving to be a barrier to the development of more innovative approaches, particularly online services, therefore we think that the consultation provides helpful clarity and examples about what is, and is not, advice. It will also help those customers who might want a bit more information but are not looking to go through a full advice process.

The consultation paper makes it clear that tools that allow search and filtering based on objective criteria are not necessarily giving advice - it also aligns the position on mortgage advice to the recently updated guidance on advising on retail investments so that a customer will have a similar experience across financial services.

Taken together, the proposals are certainly not designed to steer people away from advice when they need or want it. As the consultation paper itself says: ?we anticipate that, even under our proposals, most consumers in new purchases will still receive advice?. 

We will, of course, be responding to the consultation paper in the coming weeks.