The Intermediary – November 2025 - Flipbook - Page 66
RESIDENTIAL
Opinion
TO BOLDLY
GO WHERE
A REGULATOR
DOESN’T NEED
TO GO?
G
o to the Financial
Conduct Authority
(FCA) website and
read the speech that
chief executive Nikhil
Rathi gave at the Legal
& General Mortgage Club conference,
and there is a note which reads: “This
is a draed speech and may differ from
the delivered version.”
That feels important, because I was
at the event, and I have to say, the
positive tone reflected in the published
speech was not one I particularly felt
being in the room.
Small step, giant leap
As a starter, when discussing the FCA’s
Mortgage Market Rule review, Rathi
said: “Our response must be bold.”
Now, boldness is fine in principle.
But as those of us who deal with
the real-world impact of mortgage
regulation know, there’s a fine line
between being bold and being reckless.
At certain points, that what this
speech felt like. Reckless.
Because while Rathi talked about
the need for a bold response to build
a mortgage market of the future,
what he also said on stage – beyond
the confines of the published speech
64
The Intermediary | November 2025
For advisers, the
problem isn’t the
sentiment, it’s the
inconsistency”
– was way more telling, particularly
in terms of who might be driving the
changes we have seen this year, and
those we might get in the future.
For a start, Rathi let slip that before
issuing the recent Discussion Paper,
the FCA spoke to lenders, not advisers.
Those same lenders that have shut
thousands of branches and got rid of
the majority of their regulated, adviceproviding staff.
So, forgive me for wondering: why
didn’t he also urge those lenders to go
and train up regulated staff and offer
regulated advice?
Instead, we heard enthusiasm for
the idea that lenders could somehow
offer non-advised, tech-driven
‘support’ to consumers while still
operating in the regulated space.
And why was that seen as some
sort of positive, instead of being a
huge red flag?
The FCA now seems quite
comfortable with a future where
banks use artificial intellifgence (AI)
to deal directly with borrowers; Rathi
even admied that AI advice isn’t
perfect yet, but will be one day. That’s
not reassuring.
Effectively saying ‘some people
will fall victim to this’ and get poor
outcomes until it is ‘perfect’ as if it’s an
acceptable price to pay for progress, is
frankly alarming.
It’s a ‘you can’t make an omelee
without breaking a few eggs’
approach. Except in this case, the eggs
are consumers.
To me, it feels as if the regulator
has been starstruck by the banks
and larger lenders. Convinced by
their narrative that advice can be
automated, oversight can be lighttouch, and it will all somehow work
out fine in the end.
That’s not bold, it’s blind. The FCA
seems to be driving towards a multicar pile-up with its eyes open.
There are also numerous
contradictions here. In the wrien
speech, it says “advice and support will
