Regulator highlights need for clearer information and improved consumer safeguards
The Financial Conduct Authority (FCA) has called on lenders to strengthen their digital and mobile loan application systems, following a recent review that identified both effective and inadequate practices across the industry.
The FCA’s assessment, which forms part of its ongoing efforts to support consumers in managing their finances, found that some lenders have adopted clearer language and incorporated explainer videos to help applicants better understand loan terms.
However, the regulator also observed that certain digital processes failed to provide sufficient information, particularly regarding costs, and did not include features that encourage borrowers to pause and consider their decisions.
The findings are expected to influence digital mortgage applications in the UK, prompting lenders to review and update their online processes to ensure borrowers receive clear, comprehensive information and can make informed decisions before committing to a mortgage.
Recent FCA initiatives to support mortgage clients include reminding lenders of the flexibility in stress testing rules, which allows more borrowers to qualify for mortgages as interest rates fall. The regulator has also launched consultations on simplifying mortgage rules, making it easier for consumers to remortgage, reduce their mortgage term, and discuss options outside regulated advice. The regulator is also reviewing responsible lending rules to improve access for first-time buyers, the self-employed, and those borrowing into retirement.
“Online and app-based applications can make it easier for people to get the credit they need to navigate their financial lives,” noted Alison Walters, director of consumer finance at the FCA. “But poorly designed applications could mean people bypass important information. We’re sharing examples of what works and what doesn’t, so lenders can better support their customers.”
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