I am aware that customers who are unable to access cheaper mortgage deals are in a difficult and stressful situation. Taking action to remove unnecessary regulatory barriers that have prevented some customers from switching has been a priority for me and so I welcome the changes the FCA have made to their mortgage lending rules.
This change in the FCA’s rules should allow customers to switch to a new lender as long as they meet the lender’s risk appetite. This is determined by the lender and will take into account the circumstances of individual customers, which may include being up to date with their payments; not having significant other debt; and not being in negative equity.
Due to the uncertainty of lender’s risk appetites or the number of consumers who will choose to use the new switching opportunities, it is impossible to know precisely how many mortgage prisoners will be helped by the rule change until lenders are able to report progress to the Financial Conduct Authority (FCA).
Part of the FCA’s action to support mortgage prisoners is ensuring that borrowers, whose mortgage is currently held by an unregulated entity, are proactively contacted about this rule change. Inactive lenders and administrators acting for unregulated entities are now required to implement a communication strategy for relevant customers to inform them of the rule change within the next 10 months.
The FCA ran a consultation on the rule changes and thoroughly considered representations from various interested parties before implementing the changes in October. Most recently, I have met with Andrew Bailey, Chief Executive of the FCA, where we agreed to continue to collaborate and engage to support mortgage prisoners moving forward. In addition, I have met specifically with MPs for the All-Party Parliamentary Group on mortgage prisoners and numerous other MPs who, representing their constituents, have wished to discuss mortgage policy.