AMI-backed paper warns that without mandatory advice, first-time buyers face material risks under the expanded mortgage regime
Paradigm Mortgage Services has published a discussion paper calling for mandatory mortgage advice for all first-time buyers, arguing the measure would represent a "proportionate, evidence-based evolution" of regulation under Consumer Duty.
The paper has already drawn support from a range of mortgage industry stakeholders. Its publication follows recent FCA regulatory changes, including the removal of the mortgage advice interaction trigger under last year's Mortgage Rule Review.
Paradigm contends that the expansion of execution-only mortgage pathways, the removal of structural prompts to advice, and mounting evidence of consumer vulnerability together create a significant regulatory inflection point for the market.
The paper argues that first-time buyers frequently exhibit multiple vulnerability indicators, including limited experience of long-term financial products, lower financial resilience, high emotional investment in the purchase process, and considerable information asymmetry relative to lenders and advisers.
Paradigm notes that the home-buying process is one of the most appropriate moments for consumers to assess protection needs, yet without advice, many first-time buyers receive no structured evaluation.
The paper warns that execution-only pathways assume consumers are capable of independently identifying suitable mortgage products — an assumption it says is at odds with FCA evidence on consumer understanding, particularly among those making their first property purchase. Potential harms identified include selecting unsuitable products, underestimating affordability risks in a volatile rate environment, overlooking lender-specific criteria, and missing protection conversations.
Paradigm draws a parallel with pension mis-selling and the subsequent introduction of mandatory advice for defined benefit pension transfers, arguing that preventing consumer harm is considerably more effective than remediation after the fact.
As part of the initiative, Paradigm is inviting industry stakeholders to sign a public pledge and complete a short survey to gauge support for mandatory advice requirements.
"In a market where the stakes are so high, and where vulnerability can often be inherent, rather than incidental, mortgage advice for first-time buyers should not be optional," said Bob Hunt (pictured right), chief executive officer at Paradigm Mortgage Services.
"The convergence of the removal of the advice trigger, the expansion of execution-only pathways, and the FCA's own findings around protection gaps, creates the need for a serious debate about whether the current framework continues to deliver consistently good outcomes for first-time buyers.
"This is not a radical intervention either as many mortgage market stakeholders already recognise the heightened risks faced by first-time buyers and insist on advice being taken, especially when it comes to high LTV borrowing. What we are proposing is a proportionate and targeted safeguard for a consumer group making one of the biggest and longest-term financial commitments of their lives.
"Advice should be viewed as a minimum standard of protection for first-time buyers; we have already garnered support from advisory firms, networks and lenders, and we would urge all those who also agree to read our paper and sign the pledge to strengthen the case for this outcome."
The proposal has received backing from the Association of Mortgage Intermediaries (AMI).
"AMI strongly supports the principle that advice is essential for first-time buyers," said AMI chief executive Stephanie Charman (pictured right). "Purchasing a home for the first time is one of the most significant and complex financial decisions a consumer will ever make.
"First-time buyers face a unique combination of challenges including limited experience of long-term financial commitments, a knowledge gap around mortgage options and the home-buying process, and the emotional pressure of a high-stakes transaction.
"AMI believes that ensuring all first-time buyers access mortgage advice is essential to meeting the spirit and intent of Consumer Duty, closing the protection gap at a critical life stage and building the long-term financial resilience of this important consumer group. Advice is not a luxury for first-time buyers, it is a necessity."
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