And that may well be, stuck in an increasingly expensive or constraining mortgage arrangement.
The industry response to the proposals to deal with borrowers stuck in an unsuitable mortgage deal due to criteria or regulation changes has been universally negative.
Apart from the actual consultation responses from AMI, from the FSCP and from the CML, there has been further criticism in the most recent CML “News & Views” (Issue 7) which said, quite correctly in my view, “It is unlikely that many firms will be able to use the transitional arrangements, as proposed, to offer loans to customers seeking to remortgage away from an existing lender: the restrictions on lending new money, altering the term of the mortgage or the repayment method, or making other contractual changes are too onerous”.
So that is it in a nutshell – borrowers won’t actually be able to switch lender – they may well have to just put up with what they’ve got.
But if ever a situation called for pragmatism, it is this. Pragmatism needed from lenders, to view each case individually and make sure that customers do not suffer detriment as a result of the rigid application of rules; and pragmatism from the FSA and the FOS to see through possible rule conflicts and to realise that sometimes lenders have to be flexible to get the best outcome for both themselves and the borrower.
Given the promise to “not rush” the implementation of the MMR proposals, there is plenty of time, as well as plenty of need to get this right. What’s proposed so far is not fit for purpose.
Stephen Smith is director of housing and external affairs at Legal & General Network
