FCA’s MRR isn’t a lender story, it’s an adviser story – and most of you are ignoring it – Flavin

The Financial Conduct Authority’s (FCA’s) CP26/18 landed weeks ago. It closes on 28 July. And most advisers reading this still haven’t opened it, because somewhere in your head, it filed itself under ‘lender stuff’ and got parked.

That is a mistake. Not a small one either.

Here’s the test. If a self-employed client walked into your office tomorrow with three years of accounts and income that swings £15,000 per month depending on when contracts land, could you tell them – with confidence, not hope – what’s about to change for people exactly like them? If the answer is no, you’re not behind on paperwork. You are behind on the actual shape of your business 18 months from now.

So let’s fix that in the next five minutes.

Self-employed and irregular income clients get easier, not just different. The FCA is proposing to widen what counts as acceptable evidence for variable income, and to let lenders agree payment schedules that aren’t monthly. Quarterly, for example. If you’ve ever had to ring a self-employed client and tell them, “sorry, the numbers don’t average out neatly enough for this lender” – that conversation is about to get a lot rarer. But only for the adviser who knows the rule changed. The one who doesn’t will keep turning away business that a competitor down the road is quietly hoovering up.

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Retirement interest-only (RIO) just got simpler – and that cuts both ways. The requirement for lenders to always check whether a surviving joint borrower could cope alone may be dropped. RIO arrears sit under 1%, so the FCA is comfortable loosening the belt. Fine. But read what that actually means for you: the regulator has just moved a slice of responsibility for foreseeable harm off the lender’s desk and onto yours. More products, faster decisions, less of a safety net underneath the recommendation you make. If your advice process for later life lending is thin right now, this is not the moment to keep it thin.

Interest-only gets a tiered threshold. Below 25% of the property’s value, no credible repayment strategy required at all. Above it, tiered evidential requirements kick in. That opens the door on part and part structures for the client who’s stuck mid-career, affordability squeezed, who does not want full capital repayment but doesn’t yet want equity release either. That client exists in your database right now. Probably several of them. Go find them before someone else does.

Bridging gets redefined too – handbook definition widened to 24 months, less re-underwriting when a bridge gets extended, provided it isn’t an interest roll-up. If you have been referring bridging out because it felt like too much friction, some of that friction could be removed.

None of this is deregulation, and do not let anyone tell you it is. Consumer Duty stays exactly where it was. Firms leaning on the new flexibility will have to prove their processes and outcomes monitoring can carry the weight – and that is true of you as much as any lender. Seb Murphy at JLM said it better than most: the FCA stepping back from a two-tier advice system means advice becomes more important, not less. The risk is not that lenders get more freedom. The risk is advisers treating that freedom as somebody else’s problem to solve.

The steps to take

Here is the bit that should actually bother you. Every one of these changes widens the pool of people who can now get a mortgage who could not 18 months ago. Every single one of those people is going to need advice – proper advice, not a comparison site – to navigate a market that has just got more flexible and, by definition, more complicated. That is not a threat to your business. That is the best lead-generation gift the regulator has handed this industry in years. The only way you lose from this is by not knowing it happened.

So here is what you do. Not eventually. This week.

Read CP26/18 yourself. Not the three-paragraph summary somebody else wrote – the actual document. 20 minutes of your life. While you are reading it, go through your own client bank and count how many ‘sorry, can’t help you’ conversations from the last two years would have a different answer under these rules. Write that number down. If it is more than a handful, you’ve just found next quarter’s pipeline sitting in your own database, doing nothing.

Then go back to those clients. Not with a mailshot. With a phone call: “Things are changing, and I think you should hear it from me before you hear it from anyone else.” That’s the whole script. It doesn’t need to be cleverer than that.

And if you’ve got a genuine frontline view – respond to the consultation. The FCA is explicitly asking advisers for input, not just lenders. The people who show up now help write the rules everyone else has to live with later. The people who don’t show up just inherit whatever gets decided without them, then spend the next two years complaining about it in the pub.

This is a regulator moving toward the market instead of away from it. That happens rarely enough that when it does, you don’t get to sit it out because it looked, on the surface, like somebody else’s news.