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MPs meeting FCA chief to urge more action on mortgage prisoners

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  • 10/02/2020
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MPs meeting FCA chief to urge more action on mortgage prisoners
Politicians and campaigners are this week meeting with the Financial Conduct Authority to demand action to help 170,000 mortgage prisoners.

 

Conservative MP Kevin Hollinrake and Labour Seema Malhotra are raising the pressure on FCA outgoing chief – and soon to be Bank of England governor – Andrew Bailey over homeowners trapped paying high interest rates.

Rachel Neale, co-founder of the Mortgage Prisoners campaign group, is also attending the meeting, according to reports.

Hollinrake told the Telegraph: “Somebody somewhere has got to put some pressure on the lenders to do the right thing.”

Mortgage prisoners are borrowers who have been trapped with closed, inactive or unregulated lenders after their loans were sold off following the collapse of lenders in the financial crisis.

It means they do not qualify for a new deal and are often left paying sky-high reversion rates, while rates on products remain close to record lows.

 

Rules need to go further

The FCA modified affordability rules in an effort to help mortgage prisoners in October, however, the voluntary rules are only set to help a small segment of homeowners and do not apply to interest-only deals.

Neale told the Telegraph: “They have made a really good start in the consultation paper, but unfortunately it is only going to help around 14,000 out of 170,000, and it is not going to help people on interest-only [deals], which is the main issue with mortgage prisoners.

“We’re going to be talking about how it can go further and what they can do specifically for the different types of mortgages they are trapped in.”

Hollinrake added: “We’ve allowed lenders to sell their loan books to unregulated inactive lenders, which we have very little power over. They can just stick two fingers up at the government and say ‘we’re not doing that’.

“It is not going to be easy, but somebody somewhere has got to put some pressure on the lenders to do the right thing.”

An FCA spokesperson said: “We are determined to help mortgage prisoners who are eligible under our rule change, meet the criteria for lending and would benefit from doing so. We have done everything within our power, and it is now for the industry to take action.”

 

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