The Financial Conduct Authority says that, although most borrowers receive suitable advice, lenders and brokers still have room to improve.
The FCA’s report Embedding the Mortgage Market Review: Advice and Distribution found that in the majority of cases (59%) where advice was provided, customers were given a suitable mortgage recommendation.
Advice was found to be unsuitable in only 3% of cases.
Linda Woodall, acting director of supervision at the FCA, said: "A mortgage is a significant undertaking for anyone. It is vital that customers are able to get suitable advice and a positive experience when deciding on their options. Some firms were able to provide this, but not all.
“Although we welcome the considerable work of those firms delivering advice for the first time, and particularly those that have proactively identified issues within their own processes, there is still scope for improvement. We’ll continue working with firms to ensure they deliver good outcomes for consumers.”
Council of Mortgage Lenders director general Paul Smee said his organisation would study the FCA’s findings carefully.
“We welcome the FCA’s conclusion that there is no evidence of systemic consumer detriment or of significant numbers of customers getting an unsuitable outcome,” Smee said. “Lenders have had a huge workload in implementing the new rules and, in many ways, the report’s conclusions chime with what firms are telling us about the challenges they face.
“This work is evolving, as some lenders seek to fine-tune their processes. Like us, individual firms will welcome the opportunity to work with the FCA towards consistently delivering good outcomes for consumers.”