As the FCA’s Mortgage Rule Review consultation comes to a close, attention is turning to how lenders will respond to the regulator’s proposed reforms. Steve Bull, Managing Principal at financial services and technology consultancy Capco, says the changes present an opportunity to modernise mortgage lending by making greater use of data and technology to better reflect today’s borrowers, while maintaining responsible lending standards.
Steve Bull, Managing Principal at financial services and technology consultancy Capco, provides insight
“As the FCA’s Mortgage Rule Review consultation closes, the onus will now be on clarifying the final rules so lenders can start translating these proposals into products that make a real difference for customers.
The consultation recognises an important point: today’s borrowers don’t always fit traditional lending models.
Whether it’s first-time buyers with multiple income streams, self-employed customers or those borrowing later in life, lenders need greater flexibility to better reflect the way people earn, borrow and manage their finances.
This presents an opportunity to align lending more closely with modern lifestyles and income patterns, while continuing to uphold responsible lending standards.
Greater flexibility around affordability assessments has the potential to widen customer choice and support a broader range of products. The data, technology and analytics already exist to make this possible, giving lenders the ability to build a more complete picture of a customer’s financial circumstances and make more informed lending decisions.
However, flexibility on its own isn’t enough. Firms will need to adapt their affordability models, decisioning capabilities and product frameworks so they can apply that flexibility consistently and with confidence.
The firms that will benefit most are those that see this as more than a regulatory change. It’s an opportunity to rethink product design and the customer journey, using richer data and modern technology to create propositions that better reflect customers’ financial needs and circumstances.
Those lenders that get this right will not only broaden access but also build stronger customer trust by demonstrating a deeper understanding of how people live, work, and manage their money today.
Ultimately, the success of the Mortgage Rule Review won’t be judged by the rule changes themselves, but by whether consumers have access to mortgage products that genuinely meet their needs without adding unnecessary complexity or risk to the market.”
