The letters must be sent by third party administrators to all borrowers who have a mortgage with a lender who no longer offers mortgages by September 2020. It is understood the letters will advise borrowers they may be eligible for a better deal.
These firms may not offer mortgages either because they have stopped new lending or their mortgage book has been bought by an unregulated firm that is not authorised to offer new mortgages.
UK Finance is also working with the FCA and other mortgage trade bodies to develop ways for mortgage prisoners, who will not helped by the regulator’s relaxed affordability rules, to widen their remortgage options.
Speaking at the Open Banking expo in London last week, Sue Rossiter (pictured), mortgage regulation, UK Finance, said the trade body had set up an implementation working party with the Financial Conduct Authority (FCA) to help the industry prepare for some of the changes that would emerge from the Mortgages Market Study.
She said: “We are hoping to develop a tool for consumers to let them know if they are eligible for a new mortgage. If someone doesn’t qualify because they have some arrears, for example, they get passed on to a debt adviser or they get further information to actually rectify the situation that they are in.”
UK Finance has met with mortgage prisoner groups and is having discussions with consumer organisations. The Buildings Societies Association has also met with consumer campaign groups, said Rossiter.
Rossiter said she hoped the introduction of the eligibility tool would coincide with the launch of a customer-facing mortgage broker data base that the regulator planned to develop to direct borrowers towards local mortgage advice.