Six weeks on, the case for mandatory FTB advice is becoming harder to ignore

When we launched our Discussion Paper advocating for mandatory mortgage advice for first-time buyers at the start of June, our objective was not simply to publish another industry paper.

We wanted to start a debate about whether the mortgage market continues to provide first-time buyers with the level of support they deserve when making one of the biggest financial decisions of their lives.

The response has been extremely encouraging. We have received support from across the mortgage market, including lenders, networks, advisers and representative bodies. While organisations naturally approach the debate from different perspectives, there has been a remarkable degree of agreement that first-time buyers face unique challenges, and professional advice has an important role to play in helping them achieve better outcomes.

Just as importantly, events and ongoing changes in the intervening period have only strengthened our belief this campaign needs to continue.

The market has become even more complicated
If the argument for mandatory advice was compelling when we launched our paper, recent developments may have made it even stronger.

Consider how much the mortgage market has changed this year alone. Lenders have repriced products on numerous occasions as funding conditions have shifted. Product ranges have been withdrawn, amended and reintroduced at remarkable speed. New propositions have entered the market, including 100% loan-to-value (LTV) mortgages from selected lenders, while the Financial Conduct Authority (FCA) has itself published proposals that could significantly reshape affordability assessments and widen the availability of interest-only borrowing.

All of this is happening while interest rates fluctuate and wider economic and geopolitical uncertainty continues to influence household finances. None of this is criticism of lenders. They have responded exactly as we would expect them to, adapting quickly to changing market conditions and developing products to meet different customer needs.

However, it does raise an important question: if experienced advisers have spent much of this year helping all types of clients navigate changing products, fluctuating rates and evolving lending criteria, why would we expect somebody arranging their very first mortgage to confidently work through exactly the same issues without professional support?

The mortgage market is becoming more dynamic, not less, and that makes advice increasingly necessary, and valuable.

More choice should not mean less guidance
One of the themes running through both regulatory and government policy is increasing choice for first-time buyers. The FCA’s Mortgage Rule Review aims to improve access to borrowing. Lenders continue to innovate with new product options. The government is consulting on the introduction of a new First Time Buyer ISA, which will still sit alongside existing Lifetime ISAs (LISAs), even if new savers can’t access it.

Each of these developments has the potential to help aspiring homeowners, and they should be welcomed. However, every additional initiative also creates another decision for consumers to make.

Should someone start saving into a LISA or wait for the new First Time Buyer ISA? Should they consider a 100% mortgage if one is available? If interest-only borrowing becomes more accessible, is the lower monthly payment genuinely the right answer for their circumstances, or simply the most attractive headline figure? These are not straightforward decisions.

Indeed, recent industry research has shown advisers themselves expressing caution about wider use of interest-only mortgages for first-time buyers. If experienced professionals recognise these products require careful consideration, that should reinforce rather than weaken the argument for advice.

More choice is a positive development, but only if consumers understand the implications of the choices they are making.

Advice is about much more than the mortgage
One concern I have is that discussions around execution-only often focus purely on selecting a mortgage product. In reality, a good advice process is far broader than that. Buying a first home is often the point at which people first consider protecting their income, their family and the home they are working so hard to purchase. It is also the point where conversations around future plans, changing circumstances and financial resilience become particularly important.

Those wider discussions will not happen if the client/lender interaction is direct/execution-only and limited to choosing a mortgage product. Professional advice should help consumers understand not just what they can borrow today, but whether their decisions continue to make sense if life changes tomorrow. That is an important distinction, and one which sits comfortably alongside the principles of Consumer Duty.

Our campaign continues
Since launching our Discussion Paper, we have been genuinely encouraged by the industry’s willingness to engage with the debate. We believe that reflects a growing recognition that the objective is not to protect one distribution model over another, but to ensure first-time buyers receive the support they need in an increasingly complex market.

Meaningful regulatory change rarely happens because one organisation publishes a paper. It happens when an industry comes together around a shared objective.

That is why our campaign continues. We would encourage everyone with an interest in delivering good consumer outcomes to read it, consider the arguments it presents and, if you agree, add your voice in support. The paper and supporter pledge are available here.