MCOB 11 updated with Consumer Duty references and revised exceptions to affordability assessment

The Financial Conduct Authority's responsible lending rules for mortgages were updated on 26 June 2026, with changes to MCOB 11, the chapter of the FCA Handbook covering responsible lending and the responsible financing of home purchase plans¹. The chapter's purpose provision, MCOB 11.5.1G, now states that it requires a firm to treat customers fairly and act in accordance with the Consumer Duty (as applicable) when assessing whether a customer will be able to repay sums borrowed and interest, or pay sums due under a home purchase plan, before entering into or varying a contract¹.

The rule setting out when the affordability assessment does not apply, MCOB 11.6.3R, also carries the 26 June 2026 date¹. It lists the cases where MCOB 11.6.2R does not apply, including entering into a new regulated mortgage contract or home purchase plan as a replacement for an existing one between the same customer and firm, whether or not the new contract relates to the same property, and a variation of an existing contract, provided conditions are met¹. Those conditions are that the new or varied contract would not involve the customer taking on additional borrowing beyond the amount outstanding, other than to finance a product fee or arrangement fee, and that there is no change to the terms likely to be material to affordability¹. The rule also disapplies the affordability assessment for certain variations: one that reduces capital repayments under a repayment mortgage for no longer than six months, one that reverses a term extension within six months of it taking effect, or one made solely for forbearance where the customer has a payment shortfall or to avoid one¹.

The underlying affordability requirements are unchanged in date. MCOB 11.6.2R, which requires a firm to assess whether the customer and any guarantor will be able to pay the sums due and not to enter into the transaction unless it can demonstrate the contract is affordable, is dated 21/03/2016¹. A firm must not base its assessment on the equity in the property used as security, or take account of an expected increase in property prices, and must take account of the impact of likely future interest rate increases on affordability¹. It must assess affordability on the basis of both repayment of capital and payment of interest over the term, except where lending under an interest-only mortgage in accordance with MCOB 11.6.41R(1)¹.

The same 26 June 2026 date appears on guidance elsewhere in the Handbook. MCOB 11.6.44G, which covers high net worth mortgage customers, was updated, as was MCOB 6.8.3G on home purchase plan offer documents, MCOB 8.2.2G on equity release advising and selling, and MCOB 7.2.1G on disclosure at the start of a contract and after sale¹. The equity release and disclosure provisions now refer to firms' obligations under Principles 6, 7 and 9 and the Consumer Duty (as applicable)⁴. The Handbook does not record what prompted the changes, and no FCA policy statement or consultation explaining them has been reported.

Why it matters for households

The affordability assessment is the check a lender carries out before agreeing a mortgage or a variation to one. The 26 June 2026 changes do not alter the core test, which remains dated 21/03/2016, but they restate the chapter's purpose in terms of the Consumer Duty and set out the current list of variations that fall outside the assessment¹. For borrowers, the practical effect is on which transactions a lender must assess for affordability: switching to a replacement deal with the same lender without extra borrowing, short-term reductions in capital repayments, reversals of a term extension within six months, and forbearance variations where there is a payment shortfall are among those excluded, subject to the stated conditions¹. The rules apply to mortgage lenders and home purchase providers, with home purchase providers excluded from certain provisions, and to mortgage administrators for specified sections¹. The chapter also applies to extending the term of a bridging loan¹.

What happens next

The updated provisions took effect on 26 June 2026, the date shown against MCOB 11.5.1G, MCOB 11.6.3R and MCOB 11.6.44G¹. No further dates or transitional arrangements beyond those already in the chapter have been reported.