FCA seeks to address mortgage switch difficulties
The UK’s Financial Conduct Authority (FCA) proposed changes to the legislation regarding how mortgages change mortgage providers.
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 proposed changes to how lenders assess the loans.
In the final report of its Mortgages Market Study, 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 market is working well for many with high levels of customer engagement and competition,” says Christopher Woolard, executive director of strategy and competition at the FCA. “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.”
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 seeks to speed up more widespread participation by lenders in tools to help customers more easily identify what mortgages they qualify for.
It also includes 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.
Lastly, the regulator aims to release proposals to change mortgage advice rules and guidance to help remove potential barriers to innovation; as well as an analysis to understand more about those customers who do not switch mortgage to inform any necessary intervention.
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.