Plans to cut costs, make switching lenders easier
Britain’s financial regulator has launched a public consultation on a sweeping overhaul of its mortgage framework, marking the latest step in a broader push to modernise the country’s financial rules and make home financing more accessible.
The Financial Conduct Authority (FCA) on Wednesday released a consultation paper proposing significant changes to simplify how consumers interact with mortgage providers. The plans are intended to reduce costs and ease the process of modifying existing mortgage terms, remortgaging with a new lender, or shortening repayment periods.
In its consultation document, the FCA said the changes would support “sustainable home ownership” and align with its new five-year strategy, which prioritises consumer empowerment, economic growth, and regulatory efficiency.
“We want to make it easier, faster and cheaper for borrowers to make changes to their mortgage,” the regulator said. Such simplification, the FCA noted, would reduce the need for formal mortgage advice in situations where it is unnecessary, while still ensuring that consumers are protected and informed.
The proposed reforms follow mounting pressure from government officials who have tasked the FCA with streamlining financial regulations in order to bolster London’s status as Europe’s pre-eminent financial centre. The City watchdog has already reminded lenders of the flexibility that exists under current rules to support borrowers, particularly in the face of rising house prices and volatile lending conditions.
In April, the Office for National Statistics reported that UK house prices rose by 5.4% in the year to February, the sharpest increase in over two years. The average property price reached £268,000, buoyed by a surge in transactions ahead of the expiry of tax relief on lower-value homes.
Against this backdrop, mortgage lending is forecast to climb. UK Finance, the industry’s trade body, expects gross lending to increase by 11% in 2025, reaching £260 billion. However, major lenders remain cautious. The chief financial officer of Lloyds Banking Group, the nation’s largest home loan provider, recently expressed doubt that the strong growth seen in early 2025 would continue through the rest of the year.
The FCA’s consultation outlines plans to eliminate outdated regulatory guidance and promote greater product innovation. It is also expected to spark a wider public debate in June on the future of the mortgage market, exploring topics such as affordability assessments, lending later in life, and how regulation can respond to varying consumer needs. Mortgage lenders, intermediaries, and other stakeholders have until 4 June to respond. The FCA has signalled that it will monitor the impact of any changes through its supervision of firms and analysis of consumer complaints, regulatory returns, and, potentially, bespoke research.
The initiative comes amid a broader effort led by chief executive Nikhil Rathi, who was reappointed in April for a second term. Under his leadership, the FCA has embarked on an ambitious agenda that includes overhauling the listing regime, expediting firm authorisations, and implementing the Consumer Duty — a principle requiring firms to deliver fair value and good outcomes for consumers.
“Our strategy aims to deepen trust and rebalance risk to support growth and improve lives,” said Emad Aladhal, director of retail banking at the FCA. The regulator believes the proposed reforms will ultimately give consumers greater autonomy, reduce the burden on providers, and help align the mortgage market with a more agile, innovation-friendly regulatory framework.
As the financial sector adapts to a changing economic landscape, the FCA’s latest proposals signal a shift towards a more flexible and consumer-centric approach to regulation — one that seeks to balance prudent oversight with the practicalities of modern lending.
