UK Finance proposes FCA-led broker group to help mortgage prisoners

The trade body’s CEO Stephen Jones revealed the move in a response to the letter from economic secretary to the Treasury John Glen which was published yesterday.

In the reply, Jones said the industry was aware that borrowers trapped with inactive, unregulated or closed book lenders were likely to need support in understanding and making choices.

Jones noted that many of the customers in this group will have complex needs and are unlikely to have had mortgage advice recently.

“We also want them to have access to the widest possible choice of options from a range of lenders and products, across banks, building societies and specialist lenders,” he said.

“We have therefore suggested that the FCA issue a call for expressions of interest to develop a list of brokers willing to work with this group of borrowers.

“These brokers would also have access to the most up to date information about lender products and criteria from across the whole market.

“As you note, there will be many customers who will not be able to benefit from the FCA’s revised approach to affordability assessments by lenders,” he added.

Mortgage Solutions has contacted the FCA to ask its response to the proposal.

Extending regulation

Jones also welcomed the Treasury’s willingness to consider widening the regulation remit, which Glen discussed in his letter yesterday.

“I note that you are open to considering an extension to the regulatory perimeter where the benefits to consumers and markets can be demonstrated and we will give further thought to measures that might be beneficial and effective,” he said.

Earlier this month the FCA published analysis of the mortgage prisoner group which found only 14,000 borrowers were likely to be eligible and would benefit by remortgaging under its affordability changes.

However, as Mortgage Solutions exclusively revealed, the FCA did not conduct any analysis of those borrowers who were trapped by being presently or recently in arrears.

UK Finance said it was helpful that the FCA had published the data on the cohort and it was hoping lenders would be able to help more than the those identified by the FCA.

“Our mortgages board met last week and fully recognises the imperative to consider practical ways to help eligible borrowers, if possible a wider cohort beyond the 14,000 identified by the FCA, who are up to date with their payments, are likely to meet commercial lending criteria and who could benefit meaningfully from switching to a cheaper deal,” Jones added.