Financial Conduct Authority
FCA acts to help mortgage prisoners
Mortgage customers who have previously been unable to switch mortgages despite being up-to-date with their payments (commonly known as mortgage prisoners), could soon be able to find a cheaper deal after the Financial Conduct Authority (FCA) proposed changes to how lenders assess whether or not a customer can afford the loan.
In the final report of its Mortgages Market Study, published yesterday, the FCA confirmed its earlier findings that the mortgage market is working well in many respects but falls short of the FCA’s vision in some specific ways. The consultation on new lending rules forms part of a package of remedies designed to help the market work better.
In addition, the remedies package includes:
- seeking to speed up more widespread participation by lenders in innovative tools to help customers more easily identify what mortgages they qualify for
- a proposal for the Single Financial Guidance Body (SFGB) to extend its existing retirement adviser directory (currently under the Money Advice Service brand) to include mortgage intermediaries to help customers make a more informed choice of broker
- also consulting, in the spring, on proposals to change mortgage advice rules and guidance to help remove potential barriers to innovation
- further, in-depth analysis to understand more about those customers that do not switch mortgage to inform any necessary intervention
Christopher Woolard, Executive Director of Strategy and Competition at the FCA yesterday said:
’The market is working well for many with high levels of customer engagement and competition. The package of remedies we are taking forward will benefit consumers by encouraging innovation and making it easier for them to find the right mortgage.
’We are particularly concerned about consumers – who are commonly referred to as mortgage prisoners - who are currently unable to switch. That is why we are acting now to help remove potential barriers in our rules. These changes should make it easier for consumers to get a more affordable mortgage.’
The FCA has proposed that, for those customers who are up-to-date with their mortgage payments, and seeking to move to a more affordable deal without borrowing more, active lenders will be able to undertake a more proportionate assessment of whether they can afford the new loan. The FCA is particularly concerned about customers of inactive lenders and entities not authorised for mortgage lending as they are unable to move to a new deal with their existing lender. To ensure these customers are made aware of this change, inactive lenders and administrators of entities not authorised for mortgage lending will be required to review their customer books to identify and contact eligible customers.
Notes to editors
Latest News from
Financial Conduct Authority
Publication of costs and charges data by workplace personal pension providers03/06/2021 15:20:00
Our expectations of providers for the first publication of costs and charges information under the new rules.
Temporary Registration Regime extended for cryptoasset businesses03/06/2021 12:20:00
The extended end date will allow cryptoasset firms to continue trading while the FCA continues with its assessments.
FCA confirms measures to protect customers from the loyalty penalty in home and motor insurance markets01/06/2021 10:25:00
The FCA has implemented a package of remedies to improve competition and protect home and motor insurance customers from loyalty penalties.
Statement on the Recovery Loan Scheme (RLS)26/05/2021 16:15:00
Our approach to regulating firms in relation to the Government’s RLS.
FCA stops EverFX offering CFDs to UK customers26/05/2021 14:05:00
The FCA has acted to stop a Cypriot-based firm, ICC Intercertus Capital Ltd, and other members of its group which trade as EverFX, from offering high risk contracts for differences (CFDs) to UK investors.
FCA charges Ian Hudson with fraudulent trading and carrying on regulated activities without authorisation21/05/2021 10:25:00
The Financial Conduct Authority (FCA) has commenced criminal proceedings against Ian James Hudson, following an investigation.
FCA consults on use of new powers to support orderly wind down of critical benchmarks20/05/2021 16:20:00
Today the FCA has published a consultation on its proposed policy framework for exercising two of its new powers under the Benchmarks Regulation (BMR), which will be introduced by the Financial Services Act 2021.
All reporting firms moved to FCA’s new data collection platform RegData19/05/2021 14:25:00
RegData has replaced Gabriel as our data collection platform, with the last group of firms now moved across.
FCA announces plans to stop CMC phoenixing18/05/2021 10:25:00
The FCA has announced proposals to stop the practice of ‘claims management phoenixing’, by banning Claims Management Companies (CMCs) from managing Financial Services Compensation Scheme (FSCS) claims where they have a relevant connection to the claim.