Mortgage lender trade body UK Finance secured a voluntary agreement among 65 lenders last year that customers up-to-date on mortgage repayments could switch internally if they met certain criteria.
This was expected to help up to 10,000 mortgage prisoners whose remortgage options may have been limited by a change in circumstances.
The regulator said: “Helping consumers who have mortgages with inactive firms is more complex but equally important. Active lenders have told us that they may wish to lend to some of these consumers, but that there are regulatory barriers that may prevent them from doing so.”
The regulator has published a consultation paper which sets out proposed changes to responsible lending rules and guidance.
It expects this to help some of the 20,000 consumers with authorised but inactive firms, as well as some of the 120,000 consumers with unauthorised firms.
The regulator said it will continue to make progress with the remedies and provide updates on developments.
Other findings
In the final report of its Mortgages Market Study, published today, 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 consultation on new lending rules forms part of a package of remedies designed to help the market work better.
In addition, the remedies package includes:
- seeking to get more lenders using innovative tools to help customers more easily identify what mortgages they qualify for;
- 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;
- also consulting, in the spring, on proposals to change mortgage advice rules and guidance to help remove potential barriers to innovation;
- further, in-depth analysis to understand more about those customers who do not switch mortgage to inform any necessary intervention.
Christopher Woolard, executive director of strategy and competition at the FCA said:
“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.”
