Mortgages

FCA to impose new mortgage prisoner rules on lenders

The new Single Financial Guidance Body will also extend its existing retirement adviser directory to include mortgage intermediaries.

Rozi Jones
|
26th March 2019
mortgage house prisoner
"We are particularly concerned about consumers – who are commonly referred to as mortgage prisoners - who are currently unable to switch."

The FCA has announced new plans to help mortgage prisoners switch deals by changing how lenders assess whether a customer can afford the new loan.

The regulator announced a package of remedies this morning including new mortgage advice rules to help remove potential barriers to innovation.

The FCA says it is particularly concerned about customers of inactive lenders who are 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 the rule changes, inactive lenders and administrators will be required to review their customer books to identify and contact eligible customers.

As part of the package, the FCA will encourage lenders to proactively help customers identify what mortgages they qualify for.

It is also proposing for the new Single Financial Guidance Body 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.

Christopher Woolard, executive director of strategy and competition at the FCA, 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."

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