But, she adds, the reforms could benefit advisers if they are able to communicate the value they can offer borrowers with complex needs over going down an execution-only route.
In response to the Financial Conduct Authority’s (FCA’s) consultation proposals to simplify its mortgage rules to make it easier for consumers to talk though options, lower mortgage terms and access cheaper remortgage deals, Syms said that while they could, on the surface, benefit consumers, deeper implications should be considered.
Syms said: “The consistently high rate of advised sales, remaining above 95%, indicates consumers still value professional guidance.
“By shifting towards a more flexible execution-only process, we risk inadvertently nudging customers towards products that seem good on paper but don’t quite fit their circumstances.”
Syms says advisers will need clear guidelines to identify borrowers who genuinely require advice.
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Although the regulator plans to use Consumer Duty rules to ensure that firms have robust processes to identify customers needing additional support, she fears there is a danger of varied interpretations of the requirements. This, she adds, could lead to inconsistency across firms and confusion for consumers.
Streamlined affordability checks
Among the proposals floated by the FCA was one to remove the requirement to carry out a full affordability assessment if borrowers wish to lower their mortgage term.
Syms says this may make sense for those confident their financial circumstances will remain stable to allow for the higher mortgage payments, but it could expose other households to risks.
Syms said: “Advisers know well that clients’ circumstances can swiftly change and the flexibility to increase the term again should ideally have been made a required offering.
“The devil will truly be in the detail here as how lenders practically manage this new flexibility could significantly impact customer outcomes.”
Opportunity for mortgage advisers
The regulator’s proposal to remove the interaction trigger has prompted industry leaders to issue warnings.
Andrew Montlake, chair of the Association of Mortgage Intermediaries (AMI), said removing the advice trigger and ushering in more execution-only opens the discussions had during the Mortgage Market Review, adding that it appeared “totally at odds” with Consumer Duty.
His sentiments were echoed by chief executive Stephanie Charman, who said that if implemented poorly, the review could radically alter how consumers engage with the mortgage market.
This, she added, raises serious concerns about suitability, informed decision-making, and the future of advice.
Syms, however, did see a potential opportunity for advisers arising from the proposals.
She said: “[A rise in execution-only] could challenge the adviser model if consumers perceive less value in paying adviser fees.
“On the flip side, these reforms could benefit the adviser’s role, emphasising expertise in complex, bespoke mortgage scenarios where execution only simply doesn’t suffice.
“The adviser’s ability to clearly articulate their value in understanding complex financial situations will be more critical than ever.”
