The FCA had been accepting insight for its Mortgage Rule Review (MRR) Discussion Paper (DP) 25/2, which was published in June, and includes suggestions for a new approach to stress testing, the introduction of ‘enhanced advice’ and encouraging more innovation in later life lending.
The deadline for contributions was 19 September.
IMLA explained that around nine in 10 mortgages are arranged through intermediaries, showing that consumers value advice.
“Any regulatory simplification must not dilute access to impartial, professional guidance. In fact, the FCA should continue to encourage advice-led journeys so customers can compare their options confidently and avoid foreseeable harm,” the trade body said.
IMLA also urged the government to tackle the shortage of suitable properties, which it said was the “biggest brake on first-time buyer homeownership”, adding that affordability reform alone would not boost first-time buyer activity.
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It added that it did not support regulatory efforts to promote long-term fixed rates, explaining that the funding models they used, such as covered bonds, are not typical in the UK, tend to be more expensive and inflexible, and borrowers have shown a “limited appetite for them”.
“If meaningful consumer demand existed, the market would already have scaled competitive solutions”, IMLA said.
Regarding affordability reform, “pragmatic updates to stress-testing” and lender discretion on “appropriate buffers” is preferable to a single stress rate.
It added that it supported the “sensible use of rent-payment histories as part of a broader affordability assessment, not a sole determinant”.
IMLA said that it welcomed the recent relaxation of the loan to income (LTI) flow limit, but further recalibration should be “grounded in robust risk evidence and individual lender judgment/risk appetite”.
The trade body said it did not believe that the regulator needed to intervene in the later life lending market, as the “market will develop the solutions consumers need”.
“The single most important factor is timely access to a qualified adviser who can assess needs and, where appropriate, signpost or refer to a specialist via clear, industry-led pathways,” IMLA said.
On shared ownership, it said barriers came from scheme administration and documentation, as opposed to FCA regulation, and to intervene was “unlikely to boost volumes”.
Looking at the Energy Performance Certificate (EPC) policy, any measures “must treat all tenures fairly” and lenders “should not be made responsible for the EPC status of mortgaged properties”.
IMLA said it supports innovation using artificial intelligence (AI) to reduce admin and improve processes, but this should not replace qualified advice.
“The market will evolve faster than any rule changes – the FCA’s role should be to monitor real-world use and safeguard consumers,” it said.
Regarding the proposed “enhanced” advice level, IMLA said that the “imposition of an additional level of advice “which certain groups should receive would “introduce extra complexity and risk over-engineering the advice process in an unhelpful way”.
Kate Davies, executive director, IMLA, said: “We cautiously welcome proportionate, evidence-led steps that could help more people into homeownership where they genuinely improve outcomes. But professional mortgage advice is non-negotiable. Intermediaries are central to helping consumers navigate choice, risk and affordability.
“The UK mortgage market is broadly working well for a wide range of customers and does not need root-and-branch reform. Any changes should be measured, carefully staged and developed in close consultation with industry so we widen access without undermining standards.”
