Mortgage File Reviews and Quality Assurance in 2026: What Good QA Should Test

Mortgage file reviews should answer a simple question: does the evidence show that the customer received suitable advice and an appropriate outcome? A quality assurance process that checks only whether documents are present, forms are signed and the lender issued an offer can miss the central regulatory risk.

That point is now explicit in the FCA's 2026 mortgage work. The Mortgage Regulatory Priorities tell all firms providing advice to review the FCA's findings on record keeping and quality assurance. In its second charge review, the FCA found examples where QA frameworks concentrated on having the documentation needed for a lender to produce an offer but did not adequately assess whether the advice itself was suitable or whether the customer received the right outcome.

For mortgage brokers and networks, QA should therefore operate as regulatory assurance rather than administration. The file review needs to test the quality of fact-finding, advice reasoning, customer understanding and records, identify patterns across advisers and use those findings to improve the underlying advice process.

A file review should test the advice, not just the file

The presence of a fact-find, illustration, suitability letter and lender offer is not evidence by itself that the recommendation was appropriate. Those documents establish that a process occurred. QA needs to examine the judgement that connected the customer's needs and circumstances to the mortgage recommended.

The reviewer should be able to identify the customer's objectives, material constraints and foreseeable changes. They should then be able to see why the chosen mortgage term, repayment basis, product features and costs were appropriate. Where important alternatives were relevant, the file should explain how they were considered.

This is particularly important because mortgage files can look administratively complete while the advice reasoning remains thin. Standardised suitability wording can create the appearance of consistency without demonstrating that the recommendation was tailored to the individual customer.

A strong QA methodology therefore separates documentation checks from suitability assessment. Both matter, but a missing administrative item should not receive the same regulatory weight as a recommendation that exposes the customer to foreseeable harm.

Record keeping determines how much QA can actually prove

The FCA's second charge review found cases where incomplete or inconsistent records made it difficult to assess the suitability of advice. In some instances, further information existed elsewhere or could be provided after additional FCA probing, but the customer's file did not make the basis of the decision clear.

That creates a direct QA problem. A reviewer cannot reliably assess advice that has not been recorded. If important customer discussions exist only in the adviser's memory, the firm's control becomes dependent on the person whose work it is supposed to be testing.

MCOB requires firms to retain specified customer information and an explanation of why the advice was considered suitable. The practical purpose is that another competent person should be able to reconstruct the decision from the record. Call recordings can be particularly useful where material advice reasoning took place orally and the written summary is necessarily concise.

QA should therefore distinguish between two questions. Was the advice itself appropriate? And is there enough contemporaneous evidence to demonstrate that conclusion? A firm can have a sound recommendation with inadequate records, but that is still a regulatory weakness because the decision cannot be properly assured or defended later.

The review methodology should make those distinctions visible rather than collapsing every failure into a single generic "file incomplete" category.

Risk-based sampling is usually more useful than a fixed percentage

There is no FCA rule prescribing one universal percentage of mortgage files that every firm must review. The appropriate sample should reflect the firm's business, adviser population, products, previous findings and the risks most capable of causing poor customer outcomes.

A purely random sample can provide useful baseline assurance, but it should not become the entire methodology. Higher-risk cases may need deliberate inclusion. Debt consolidation, later-life borrowing, interest-only, vulnerable customers, high fees, complaints, rejected advice, execution-only cases and unusual loan structures can each justify additional scrutiny depending on the firm's model.

Adviser risk should also influence sampling. A new adviser, a person with repeated QA findings or an adviser whose business mix changes materially may need a higher review rate than an experienced adviser with consistently strong evidence. The firm should be able to explain why sampling changes rather than applying one static percentage indefinitely.

The objective is not to make QA punitive. It is to direct assurance towards the places where a weakness is more likely or where the consequences could be more serious.

A balanced programme can therefore combine routine random testing with targeted thematic reviews and event-driven sampling. The methodology should be documented so senior management understands what the sample can and cannot demonstrate.

Scoring should distinguish customer harm from administrative weakness

QA scoring becomes less useful when every issue is treated as equivalent. A missing date, weak file note and unsuitable debt consolidation recommendation should not all create the same result merely because each technically represents a finding.

The firm's methodology should distinguish the regulatory significance of different weaknesses. Suitability, foreseeable harm, misleading communication, vulnerability and material customer cost generally deserve more weight than lower-risk administrative defects. The precise scoring model can vary, but it should reflect the firm's risk appetite and regulatory obligations.

Reviewers also need clear guidance on what evidence is sufficient. A scoring framework containing broad labels such as "good", "needs improvement" and "fail" can produce inconsistent results if reviewers apply different standards to the same type of file.

Calibration helps address this. Reviewers can periodically assess the same cases, compare their conclusions and resolve differences in interpretation. This is particularly important where the firm has several QA staff, outsources reviews or operates a network with multiple supervisory teams.

The purpose is not mathematical precision. It is enough consistency that management can rely on trends and compare advisers without the result being driven mainly by reviewer preference.

Debt consolidation and second charge cases deserve particular attention

The FCA's 2026 work identified advice weaknesses in the second charge market, especially where customers were consolidating debt. The regulator found examples where advisers focused on eligibility, failed to obtain enough information about existing debts, did not clearly explore alternatives or concentrated on monthly payment reductions without fully explaining longer-term cost.

Those findings have wider QA relevance. The FCA explicitly said that aspects of its record-keeping and quality assurance findings may interest firms across the broader mortgage market and then repeated that message in the Mortgage Regulatory Priorities.

A file review involving debt consolidation should therefore test more than whether the customer's monthly payment reduced. The reviewer should understand the existing debt balances, rates and relevant charges, the effect of extending repayment, the consequences of securing unsecured debt and the reasons the recommendation was appropriate.

Where the customer has known payment difficulties, the file should also show that the relevant alternatives required by MCOB were considered. QA should be capable of identifying where the sales process has narrowed the conversation before the customer's actual needs were properly explored.

A recurring debt consolidation weakness can indicate a broader problem with scripts, incentives, adviser training or fact-find design rather than isolated adviser error.

Consumer Duty should change the questions QA asks

Consumer Duty means file review should consider outcomes as well as rule compliance. A recommendation can satisfy a narrow documentation checklist while the journey still creates foreseeable harm, weak understanding or poor support.

For mortgage advice, the products and services outcome can connect with whether the recommended service and mortgage meet the customer's needs. Price and value can affect broker fees and the value of the intermediation service. Consumer understanding concerns whether the customer receives the information needed to make an informed decision, while consumer support is relevant where the customer requires additional help or experiences difficulty.

QA should therefore consider the journey rather than one document. For example, the suitability letter may contain a clear explanation of fees, but if the customer was effectively committed before those fees were understood, the wider outcome may still require attention.

The FCA's July 2026 outcomes-monitoring work reinforces this approach. Listing metrics or completing file checks is not enough if the firm cannot explain what the evidence says about customer outcomes and what action follows.

A good QA report should therefore identify not only whether the adviser followed procedure, but whether there is evidence of a good outcome and whether any weakness could affect similar customers elsewhere.

Call recordings can strengthen the evidence where used properly

Mortgage advice often involves significant oral interaction. A concise written file can therefore miss important context about how the customer's objectives were explored, what alternatives were discussed and how the adviser explained a material trade-off.

Call recordings can help reviewers understand that context. The FCA's second charge findings specifically note that more detailed records of customer conversations, including telephone call recordings, can help firms demonstrate the quality of advice.

That does not mean every QA review must listen to every call. The firm should decide when audio evidence is most useful. Higher-risk files, unclear written reasoning, customer complaints or cases where the advice changed significantly during the journey may justify call review.

The QA methodology should also avoid using call recordings simply to rescue inadequate record keeping after the event. If important reasoning is consistently absent from the written file, the firm may need to improve its documentation standards even where the recording proves that the adviser had a proper conversation.

Recordings are therefore a valuable evidence source, not a substitute for a coherent customer record.

QA findings should feed adviser competence and process design

Individual feedback is an obvious output from file review, but the stronger value lies in identifying patterns. If several advisers make the same error, the firm should consider whether the cause sits in training, system design, product information, management expectations or incentives.

Competence assessment should therefore use QA evidence intelligently. One isolated administrative error may not justify the same response as repeated weak suitability reasoning. Conversely, an adviser with consistently clean files should not automatically be assumed competent in a higher-risk product they have not previously advised on.

The firm should also look for patterns by product, lender, branch, AR or customer type. A concentration of findings in one area can expose a process weakness that would remain hidden if QA is reported only as adviser pass rates.

Senior management information should focus on what is changing. The number of files reviewed is useful operational information, but management should know which risks are increasing, which advisers or teams require additional support and whether previous remediation has improved outcomes.

QA becomes a stronger control when it can change both individual behaviour and the system in which advice is delivered.

Remediation should be tested before findings are closed

A QA finding should not be treated as resolved simply because the adviser has received feedback or completed training. The closure evidence should correspond with the cause of the weakness.

If the problem was incomplete fact-finding, follow-up files should show that relevant information is now being captured and used. If the issue was poor explanation of debt consolidation trade-offs, subsequent reviews should test whether customers are receiving clearer advice. If the problem sat in the firm's template or workflow, the system change should be tested operationally.

Material findings may also require consideration of historic customer impact. A recurring suitability weakness can indicate that other customers outside the reviewed sample may have received poor advice. Management should assess whether broader review or remediation is required rather than limiting the response to future cases.

The QA framework should therefore have a clear route from finding, to root cause, to action, to retesting. That is more valuable than a large volume of reviews where the same findings reappear each quarter.

What should the board or senior management see?

Senior management should receive enough information to understand the quality of advice across the firm. That normally means more than an overall pass rate.

Useful MI can include material suitability failures, themes, adviser and team trends, higher-risk products, complaint-linked reviews, repeat findings, remediation progress and any evidence that particular customer groups receive weaker outcomes. The exact measures should reflect the size and complexity of the firm.

The report should also identify limitations in the QA process. If a sample is small, if call recordings are unavailable or if records are too weak to reach a conclusion, management should understand that uncertainty rather than receive an artificially confident result.

A mature QA function provides challenge rather than reassurance. Its purpose is to help the firm detect and correct advice weaknesses before they become systemic customer harm or an FCA supervisory issue.

How Regulatory Counsel can support

Regulatory Counsel supports mortgage brokers, networks and lenders with file reviews, quality assurance frameworks, adviser sampling, Consumer Duty testing, thematic reviews and remediation. We can provide independent second-line reviews or assess the design and effectiveness of the firm's existing QA programme.

Speak to Regulatory Counsel to discuss mortgage file review and quality assurance support.