FCA must act swiftly to help 140,000 mortgage prisoners
10 January 2019
Mortgage prisoners are those unable to remortgage or switch to a cheaper mortgage rate due to changes in legislation following the financial crash.
Andrew Bailey, Chief Executive of the Financial Conduct Authority (FCA), has today written to Rt Hon. Nicky Morgan MP, Chair of the Treasury Committee, to provide an update on the FCA's work on this issue.
Action has been taken by the FCA to help the 10,000 mortgage prisoners who are customers of active mortgage lenders, but there remains 140,000 customers of inactive lenders or firms not authorised to lend.
Commenting on the correspondence, Rt Hon. Nicky Morgan MP, Chair of the Treasury Committee said:
“The Treasury Committee has consistently raised the problems of mortgage prisoners with the Government and the FCA.
“Under pressure from the Committee, the FCA has worked with industry and established a voluntary agreement, which allows most of the 10,000 mortgage prisoners of active lenders to switch to a better deal.
“Whilst help for these customers is a welcome step, there remain 120,000 mortgage prisoners with unregulated firms, and 20,000 with regulated but inactive firms. These customers are trapped on a far higher interest rate than is necessary through no fault of their own.
“The FCA has today announced that it will consult on changing its lending rules to allow such customers to switch to an active lender, with whom they may be able to get a better deal.
“The regulator must now act swiftly to help these 140,000 mortgage prisoners, and not use this consultation to kick the issue into the long grass. We will raise these issues when we take evidence from the FCA next week.”
Rushanara Ali comments
Rushanara Ali MP, Member of the Treasury Committee, said:
“The FCA appears to be taking steps in the right direction to ensure that mortgage prisoners aren't stuck making higher-than-necessary mortgage payments.
“Whilst there is clearly more work to be done by the regulator, industry also has a vital role to play. As Mr Bailey said, firms need to be willing to offer re-mortgaging opportunities to these customers once the regulatory barriers are removed. I hope the FCA will ensure the regulatory barriers are removed as soon as possible and that the FCA closely monitors the actions of the lenders in this regard.”