Speaking at the Financial Services Expo, FCA mortgage and consumer lending director Linda Woodall said the mutual’s decision to increase rates on certain buy-to-let tracker mortgages did not set a precedent for lenders. Instead, the regulator would consider decisions on a case-by-case basis.
She said: “We recognise that there is an issue to be debated in the industry about customers’ expectations and changing of terms and conditions, even if correct.
“What we will be doing during the course of the autumn will be releasing a discussion paper to debate this with the industry.”
An alternative to considering lender rate rises on a case-by-case basis was to look more generically at whether it was fair for a firm to make changes based on legitimate terms and conditions if this meant changing the fundamental reason the consumer had taken out that product, she said.
The regulator was also in the middle of a thematic review examining whether the practice of forebearance since the crisis was leading to a ‘forebearance bubble’, she revealed.
Woodall also voiced concerns about the behaviour of certain packagers. Despite being unregulated, she warned they were falling into the trap of providing advice.
“It may start with asking consumers questions to clarify something but it doesn’t take too long before you get into the advice process,” she said. “At the end of the day that is regulated and it should be the adviser providing advice.”
She addressed the issue of ‘hybrid’ lifetime mortgage products which were being marketed at interest-only borrowers who could need to borrow into retirement.
Only those advisers with the additional relevant qualifications could advise on lifetime mortgages as defined by the regulator, she said. However, many products that extended into retirement did not fall under this definition and therefore could be sold.
John Charcol senior technical manager Ray Boulger, who asked Woodall about West Brom, said he welcomed the plan for a discussion paper.
