Mortgage Regulation, Legislation and Supervision
The regulatory map
Mortgage advice in the UK sits under FSMA 2000 and the FCA Handbook. The FCA handles conduct for first- and second-charge residential mortgages; the PRA handles prudential supervision of banks and insurers. Since the Mortgage Credit Directive was implemented in 2016, consumer buy-to-let and second-charge lending have been inside the regulated perimeter alongside the long-regulated first-charge market.
Key sources are MCOB (conduct, disclosure, arrears), the Training and Competence sourcebook, SYSC for systems and controls, and the Principles for Businesses, including treating customers fairly. Advisers need the correct permission, must be fit and proper, and disclose their status (independent or restricted) through the initial disclosure document. Product disclosure uses the European Standardised Information Sheet (ESIS) introduced under the MCD, with a seven-day reflection period before a binding offer. Financial promotions must be fair, clear and not misleading.
Redress sits outside the firm. The Financial Ombudsman Service can award up to the statutory limit, and a complaint must be resolved within eight weeks before the customer may escalate. The FSCS protects deposits and insurance claims up to £85,000 per person per firm, with 100% cover for certain protected claims.
Traps
FOS time limits (six months from the final response; six years from the event, or three from when the customer should reasonably have known), the eight-week clock, and record retention (typically three years). Do not confuse the ESIS reflection period with a general cancellation right, and remember that once funds are drawn there is no free statutory right to cancel the mortgage.
Rule of thumb: if a fact pattern quotes a timescale or a notice period, check it against MCOB before anything else.