The FCA announced earlier this month that it would be consulting on simplifying mortgage rules to make it easier for customers to talk about their options, lower their mortgage terms and access cheaper products for remortgage.
The regulator is also proposing to retire two pieces of non-Handbook Guidance that it believes have fulfilled their purpose.
However, the AMI has said the proposals “overlook the critical role of mortgage advisers” and that “reduced access to quality advice” will lead to “poorer outcomes for all”.
The FCA consultation said around 97% of mortgage business is conducted through advice, which the AMI said demonstrates the value of advisers.
The AMI said the “intermediary channel is a core strength” of the UK mortgage market and questioned the assumption that it is a “market failure”.
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The trade body pointed to low levels of customer complaints in this area, adding that it is “unclear where consumer detriment lies”.
The AMI pointed to product transfers as an area of concern, as it said the FCA is pushing many borrowers to go through an execution-only route, which could mean they do not fully understand their range of options as well as the protections and advice they are missing out on.
The trade body said that in 2024, of the 1.4 million borrowers who remortgaged, 83% stayed with their existing lender but many still sought advice, so wider options were looked at along with protection needs.
The AMI noted that customers already had a choice of high street lenders offering advice through director propositions, online/non-advised or through advisers.
Therefore, the trade body argued, removing advice raises the question of who will be liable if things go wrong; whether this would be lenders or if the Financial Ombudsman Service (FOS) will face more complaints from customers who have taken the wrong option when faced with a “myriad of choice they may not fully understand”.
“The financial aspect of increased FOS cases cannot be understated, and it is an increased cost all parties will be subject to,” it said.
The AMI said it was “actively engaging” with its members, the regulator and other trade bodies to ensure that the “voice of the intermediary market is heard”.
It said it supports innovation but it must “align with the spirit and the letter of the Consumer Duty and not at the expense of advice”.
Stephanie Charman (pictured), chief executive of the AMI, said: “Mortgage advisers play an irreplaceable role in helping consumers navigate complex, life-changing financial decisions. You simply cannot deliver the Consumer Duty by removing advice. The duty requires firms to act in ways that deliver good outcomes, support consumer understanding, and empower effective decision-making – none of which are achieved by steering borrowers away from professional advice.
“The proposals set out by the FCA go in the opposite direction. They risk stripping consumers of essential protections while simultaneously threatening the long-term viability of thousands of advice firms across the UK. This isn’t just about loss of income, it’s about undermining an advice model that has proven time and again to act in the consumer’s best interest.
“We will be engaging with the FCA to look at how we support their objectives, working in collaboration with lenders and advisers, not against them, to simplify the mortgage process without sacrificing the value high-quality advice brings.”
