Latest news with #FCA


The Independent
6 hours ago
- Business
- The Independent
The changes to lending that could be a leg-up for home buyers
The Financial Conduct Authority (FCA) is proposing and implementing changes to mortgage regulations to make it easier for first-time buyers to get onto the property ladder and stimulate economic growth. These changes include greater flexibility on interest rate stress tests, considering past rent payments as proof of affordability, and altering loan-to-income ratio rules for lenders. The move comes as high house prices, tough existing mortgage rules, and recent stamp duty changes have made home ownership increasingly difficult for many. While some lenders, such as Santander and Nationwide, are already relaxing their lending criteria, mortgage brokers caution that responsible lending and borrowing are crucial to prevent future financial hardship. The FCA aims to balance increased accessibility with market stability, ensuring sustainable home ownership without repeating past financial crises.


The Independent
7 hours ago
- Business
- The Independent
How mortgage market changes could help first-time buyers onto the property ladder
SPONSORED BY TRADING 212 The Independent Money channel is brought to you by Trading 212. First-time buyers may be set for a leg-up onto the property ladder thanks to changing attitudes from the financial regulator - but there are risks to the changing landscape. Getting on the property ladder has been made harder in recent years by record high house prices that have outpaced wage growth. Additionally, stamp duty thresholds dropped for first-time buyers in April from £425,000 to £300,000 and from £250,000 to £125,000, adding to the upfront costs of buying a property. First-time buyers may still benefit from the stamp duty exemption across most of the country where properties are worth below £300,000, though the average property price in London is £567,000, making it hard to buy in the capital. Even if you can find a property, many buyers have been restricted by tough mortgage regulations. The Financial Conduct Authority (FCA) introduced tougher lending rules in 2014 under the mortgage market review to stop a repeat of the 2008 financial crisis, where many borrowers were left with loans they couldn't afford. That has meant buyers have to pass tough affordability assessments and interest rate stress tests. One silver lining is that mortgage rates have been falling in recent months, although they remain higher than historical standards. This all makes getting on the property ladder more complex and expensive - but it may be about to get easier. How is the mortgage market changing Ultimately, a housing market without people buying homes means less money is spent in the economy on activities such as estate agencies, legal services and removals, plus the Treasury takes less tax. This is part of the reason why Chancellor Rachel Reeves has called on regulators to be more inventive to help stimulate economic growth. The FCA launched a discussion paper last month seeking ideas on changes to encourage home ownership and economic growth. Outcomes include more flexibility on stress tests, letting past payment of rent alone prove affordability and lending to first time borrowers based on their expected career trajectories. David Geale, executive director for payments and digital finance, said: 'We want to evolve our mortgage rules to help more people access sustainable home ownership. Having achieved higher standards in the market, now is the time to consider allowing more flexibility in a trusted market. "Changing our mortgage rules could make it easier for people to get onto the property ladder and manage mortgages into retirement. 'We can't solve all the issues related to home ownership. But we're playing our part in helping people better use the mortgage market to navigate their financial lives and to encourage a dynamic, innovative and competitive market.' Changes already in effect The FCA has already made some changes by altering rules around loan-to-income (LTI) ratios. The ratio caps the number of new residential mortgage loans that can be made at an LTI of 4.5 times or more to 15 per cent of their total number of new mortgage loans per year. Since 11 July 2025, the limit has applied to lenders who approve loans with a total value of above £150 million a year, rather than the current £100m threshold that was set in 2014. This will ultimately help smaller mortgages approve more loans. Rachel Geddes, strategic lender relationships director at the Mortgage Advice Bureau, said lenders, brokers and customers have been crying out for an update for some time. She added: 'The caps for lenders have been so rigid as they've tried to be risk averse, so it's actually become a hindrance in limiting the customer's ability to buy. 'We need to help people become homeowners, and this is one of the ways of doing it - as long as it's done in a very responsible way.' Santander then became one of the first lenders to relax their stress test rules, with others following. There are signs that the sentiment from the FCA is being reflected among mortgage lenders. Average mortgage rates are close to a three-year low, according to Moneyfacts, while product choice has also increased overall to 6,908 options - the highest level since October 2007. Nationwide has already said it will increase its lending limits. Many mortgage brokers remain cautious though, with memories of the 2008 financial crash still on many people's minds, when homeowners got stuck in negative equity as house prices crashed and the value of their property fell below what their loan was worth. Riz Malik, director of R3 Wealth, said: 'First-time buyers need help but not at any costs. Lending them more today might get them on the ladder but it is not helpful if that mortgage then becomes a noose and you end up living to pay your mortgage if rates rise in the future. 'Just because a lender may give you a large mortgage doesn't mean you should take every penny they are prepared to lend and inexperienced borrowers need to be made aware of this.' Responsibility remains key for both lenders and borrowers, as well as regulators. Rob Peters, principal at Simple Fast Mortgage, added: 'Relaxing rules could open the door for many who currently can't get on the property ladder, but we must tread carefully. 'Greater flexibility in lending can encourage innovation and expand options, but it also brings risks if we don't keep affordability and long-term sustainability at the forefront. The key is balancing innovation with responsible lending, ensuring people don't overcommit and face financial hardship down the road.' 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Yahoo
8 hours ago
- Business
- Yahoo
BIBA appeals to Chancellor on regulatory relief
The British Insurance Brokers' Association (BIBA) has requested the Chancellor to consider easing the regulatory constraints on insurance brokers. In a letter, BIBA chief executive Graeme Trudgill stressed the importance of insurance brokers to the UK economy and the challenges posed by current regulatory measures. BIBA argues that over-regulation is hindering the ability of brokers to serve their clients and is contributing to a decline in the sector, as evidenced by the low number of new broker authorisations compared to the number of firms exiting the market in the first quarter of 2025. The association is seeking a revision of the Financial Conduct Authority's (FCA) regulatory framework, suggesting that a more 'balanced' and 'reasonable' approach to regulation is necessary to support the government's growth agenda and to maintain the UK's position in the global market. 'Now is the time to stop the downward spiral on productivity, to encourage new firms to start up, and to persuade the smaller businesses that serve the local communities to stay in the sector', the letter read. Trudgill's letter calls for a regulatory environment that reduces complexity, encourages innovation, and supports the establishment and scaling of new firms. BIBA believes that the FCA's mandate to regulate for growth should translate into tangible changes, including a more 'reasonable reporting requirements' rather than 'simplifying insurance rules' in a recent step by FCA. 'Now is the time, Chancellor, for bold action – not just cutting red tape, but resetting regulation', Trudgill said in the letter. The letter concluded with a call for the Chancellor to use the upcoming presentation of the Financial Services Growth and Competitiveness Strategy to initiate a shift towards regulation that better balances consumer protection with the need for economic growth and 'competitiveness' in the insurance broking sector. In May 2025, the FCA announced plans to update its insurance regulations by eliminating "outdated or redundant requirements" from its rulebook. "BIBA appeals to Chancellor on regulatory relief " was originally created and published by Life Insurance International, a GlobalData owned brand. The information on this site has been included in good faith for general informational purposes only. It is not intended to amount to advice on which you should rely, and we give no representation, warranty or guarantee, whether express or implied as to its accuracy or completeness. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content on our site.

Finextra
11 hours ago
- Business
- Finextra
FCA Issues Final Guidance on Politically Exposed Persons (FG25
A more proportionate, risk-based approach to AML compliance On 7 July 2025, the Financial Conduct Authority (FCA) published its finalised guidance FG25/3, updating how firms should treat politically exposed persons (PEPs) under the UK Money Laundering Regulations. This update follows a comprehensive multi-firm review, a public consultation (GC24/4), and recent amendments to the 2017 Money Laundering Regulations. The aim is to reinforce a risk-sensitive and proportionate approach to Enhanced Due Diligence (EDD) obligations, particularly when dealing with domestic PEPs, their family members, and close associates. The FCA's new stance reflects changes in UK legislation and encourages firms to reduce unnecessary friction during onboarding, especially for low-risk individuals. What's Changed and Why It Matters The FCA has made several important clarifications in this guidance. Most notably, the starting point for all firms should now be that UK PEPs present a lower risk than foreign PEPs, unless other risk factors are present. This principle should also apply to their family members and known close associates. This shift is intended to ease the experience of low-risk customers and avoid disproportionately burdensome checks, aligning with broader expectations under the Consumer Duty. The FCA also confirmed that non-executive board members (NEBMs) of UK civil service departments are no longer to be treated as PEPs. Similarly, the updated guidance includes a clearer definition of high-ranking military officials and limits judicial PEP classification to Supreme Court judges only. The Northern Ireland Assembly has been added to the list of devolved administrations, making it explicit that its members fall under the scope of national PEP definitions. Importantly, firms now have greater flexibility when approving PEP relationships. While approval from senior management remains mandatory, it no longer has to come from the Money Laundering Reporting Officer (MLRO) specifically. Instead, firms can designate other suitably trained senior staff, provided that the MLRO retains oversight of the process and ensures compliance with the FCA's standards and the firm's internal risk framework. A Smarter Approach to Risk Assessment The FCA reiterates that not all PEPs pose the same level of risk. The revised guidance introduces clear indicators for distinguishing between lower-risk and higher-risk PEPs. For example, UK politicians who hold no ministerial office, or those from countries with low corruption and transparent public institutions, may qualify for less intrusive EDD. In such cases, firms can rely on public records, internal data, or simplified documentation rather than conducting repeated or intensive reviews. In contrast, PEPs from countries with weak governance, high corruption levels, or opaque procurement processes may still warrant more stringent due diligence. These situations will require more detailed verification of source of wealth and funds, senior-level approvals, and ongoing monitoring. The guidance also clarifies that former PEPs must continue to be treated as such for a period of 12 months after leaving office. However, their family members and close associates may be declassified sooner, unless specific risk factors justify further scrutiny. The FCA encourages firms to monitor trigger events, such as elections, and suggests inviting customers to inform them of changes in circumstances to keep records current. Group-Wide Expectations and Cross-Border Challenges Firms headquartered in the UK are now expected to apply this risk-based, proportionate approach across all subsidiaries and branches, including those outside the UK, unless local law prohibits it. For foreign firms operating in the UK, the FCA expects compliance with UK Regulations for all business relationships within the UK. The FCA does not offer guidance on conflicts with non-UK legislation, but stresses that firms should be clear on how they resolve such discrepancies in line with their own risk frameworks. Family Members and Close Associates The updated guidance clarifies the definition of PEP-connected individuals. Spouses, civil partners, parents, children and their partners, and now siblings are all clearly included. Others, such as uncles, aunts or more distant relatives, should only be brought into scope if there's a justifiable reason based on the PEP's risk profile. Close associates remain those with joint business interests or known legal structures set up for a PEP's benefit. However, association alone does not make someone a PEP, and the guidance reinforces that such individuals should not be subject to automatic exclusion or excessive scrutiny. Practical Implications for Firms The finalised guidance emphasises the need for well-documented policies, appropriately trained staff, and clear, consistent risk assessments. Firms should avoid defaulting to a one-size-fits-all approach. Declining a business relationship on the basis of PEP status alone, without evidence of unmanageable risk, is unlikely to be considered appropriate, particularly in light of the FCA's expectations under Consumer Duty. If a firm chooses to apply enhanced measures beyond those required, this must be justified and proportionate, based on an individual's role, jurisdiction, or other contextual factors, not merely their status. This is a welcome recalibration of the FCA's expectations around PEPs. It aims to strike a better balance between financial crime prevention and fair customer treatment. Firms should now ensure that their PEP processes are aligned with the new guidance and consider how these updates impact both onboarding journeys and ongoing monitoring strategies. For those in compliance, legal, operations, or product, this is the time to review internal PEP policies, update delegation frameworks, and train relevant staff accordingly. The FCA's message is clear: proportionality, documentation, and risk-based judgment must be at the heart of your AML controls.


Scottish Sun
11 hours ago
- Automotive
- Scottish Sun
Key mistake that could see you lose up to 36% in car finance misselling scandal compensation
We reveal top tips for finding out if you're affected below CAR BLOW Key mistake that could see you lose up to 36% in car finance misselling scandal compensation Click to share on X/Twitter (Opens in new window) Click to share on Facebook (Opens in new window) MOTORISTS affected by the car finance mis-selling scandal have been issued a warning over a simple mistake that could prove costly. Impacted drivers should avoid using claims management companies (CMC) or law firms to get compensation, the regulator has said. Sign up for Scottish Sun newsletter Sign up 1 The FCA has cautioned against motorists claiming compensation through CMCs Over 23million people believe they could be owed money due to mis-sold car car finance loans, according to recent research. However, the Financial Conduct Authority (FCA) has cautioned anyone using a CMC or law firm could lose a hefty amount of any payout in fees. The FCA said: "Consumers should be aware that by signing up now with a CMC or law firm, they may end up paying for a service they do not need and losing up to 30% of any money they may receive." The amount of compensation swallowed in fees can be worth up to 36% too, as claims companies can charge additional VAT. The amounts of compensation affected drivers will receive are yet to be confirmed, but someone in line for a £1,000 compensation would see £360 paid out in fees. The FCA is currently waiting for the outcome of a Supreme Court ruling before deciding whether a mass redress scheme for affected drivers will go ahead. It said in June it will confirm within six weeks of that ruling whether a scheme will go ahead. The regulator also laid out how a possible scheme would look and when any compensation could be paid, estimated to be in 2026. What is the car finance mis-selling scandal? The Car Finance Discretionary Commission Scandal affects those who bought a car, motorbike or van on finance before January 28, 2021. After this date, the FCA banned lenders from using "Discretionary Commission Arrangements" (DCAs). DCAs allowed brokers to increase interest rates on car finance loans, which in turn saw their commission bumped up. It has been classed as an unfair practice because drivers weren't told about the DCAs and therefore thought any deals were a fixed price they couldn't negotiate on. But, anyone who took out a vehicle on finance before January 28, 2021, could have been paying more than they should have. The FCA estimates around 40% of car deals bought on finance before 2021 could be affected. Lloyds Banking Group has set aside £700million for potential compensation relating to the scandal. Barclays has allocated £90million, while Santander said last year it had earmarked £295 million for potential payouts. The Royal Bank of Canada has estimated that the industry's bill for motor finance compensation could stretch to £13billion while Which? estimates it could cost them up to £16billion. What could the compensation scheme look like? Lucy Andrews, deputy consumer editor at The Sun, explains what you need to know. The FCA is mulling over what a redress scheme would look like if the Supreme Court rules that drivers should be compensated. The watchdog will set out rules for how claims will be assessed and calculated. There are two main options for a redress scheme: an opt in, or opt out structure. Under an opt-in scheme, you would have to sign up and confirm you want to be included within a certain time limit. An opt-out scheme would mean that customers are automatically signed up. How to find out if you're affected and next steps The website has a tool you can use to find out if you might be in line for compensation. You can find it via It also lets you draft a letter to submit a complaint to the lender or broker who sold you a car finance deal ahead of any Supreme Court ruling. You can also do this yourself. Sarah Coles, personal finance expert at Hargreaves Lansdown, said: "Say (in the letter) why you want to complain, and include as much information as you can. "They should acknowledge your letter within eight weeks, but they don't have to send you a final answer until after December 4 this year – because things have been put on hold while the legal cases rumble on." If you're not happy with your firm's response, you can complain the Financial Ombudsman Service (FOS). Contact details for the FOS can be found via However, it might be worth waiting until the FCA has laid out its next steps for a redress scheme. This is particularly important as some CMCs and law firms have advertised highly speculative figures for how much drivers could be owed in compensation. The FCA has said it will make any scheme easy to take part in without the need for a CMC or law firm. Do you have a money problem that needs sorting? Get in touch by emailing money-sm@ Plus, you can join our Sun Money Chats and Tips Facebook group to share your tips and stories