The key issue with this reform is that it will require a considerable amount of work from the regulator to resolve potential legal and regulatory issues to implement a regime that is both clear but also enables innovative new products and services to develop.
Subsequently, advisers will need to ensure that they are across the detail of the regulatory developments to best take advantage of the changes.
Longer-term fixed rate mortgage products
One of the key aspects of Labour’s plan is to explore alternative models for increasing financial resilience.
This includes the consideration of longer-term fixed rate mortgages. The plan notes that these types of mortgages are more prevalent in other jurisdictions (Germany, Denmark and the Netherlands are specific examples that are referred to).
As a financial adviser, you may need to familiarise yourself with these new products and understand how they can benefit your clients.
These mortgages could provide greater certainty for borrowers as they can lock in a rate for a significant period of time, but they may also come with their own set of risks and considerations, such as higher initial rates compared to shorter-term products.
Advisers will need to help clients weigh these factors to make informed decisions.
'Green' mortgages and sustainable finance
Labour’s plan also aims to make the UK a global hub for green finance activity. This includes the introduction of green mortgages, which are designed to finance energy-efficient homes.
As an adviser, this may become another product that you need to understand and help customers to know how they can benefit from these products. You may also need to keep abreast of the evolving regulatory framework around sustainable finance.
Sustainability in finance is not a new phenomenon. Sustainable investing has been a hot topic in the investment world for some time.
One key issue it can create for advisers is that it complicates the advice process by adding new factors that advisers and consumers must grapple with.
The new green mortgages could offer lower rates for borrowers who purchase energy-efficient homes or make energy-saving improvements. But these products may also come with their own set of specific terms, risks and other considerations.
As an adviser, you will need to stay informed about these products and the criteria for qualification. As a general rule, it is becoming more important for advisers to understand the broader landscape of sustainable finance, including the growing emphasis on environmental, social, and governance factors in financial decisions.
This builds on top of the existing knowledge base that advisers are expected to have.
A slimmed-down FCA handbook
Labour’s plan emphasises a more joined up and innovation-centred approach to regulation and supervision and champions the outcomes-focused regulation approach of the FCA.
