On Friday, the regulator revealed it had written to firms to ensure high risk borrowers on variable rates were treated fairly and not placed on “outlier” rates.
It also warned against putting borrowers under undue financial pressure at a time when they might be experiencing temporary payment difficulties.
The FCA went on to say that where the firm has the power to set rates on its mortgage book, it should do so in a way that is fair to customers.
If the lender is unauthorised, and its mortgage book is administered by a regulated third party that cannot set rates, the administrator should notify the lender of the FCA’s letter.
False hope
But the UK Mortgage Prisoners campaign group said although it was grateful for the regulator’s intervention it was worried that the announcement would give families false hope.
In a statement the group said: “We do not wish to dampen spirits, but for those of us who have ridden the emotional roller coaster for over a decade, and more recently began to engage personally with the FCA, key policymakers and regulated lenders, we are seriously concerned that this type of bold media statement will yet again fail to translate into anything tangible for mortgage prisoners.”
The group said the FCA’s instructions only apply to firms that are regulated and have the power to reduce interest rates.
Adminstrators such as Landmark that operates on behalf of the unregulated US owned-fund Cerberus, does not have the power to reduce rates.
Under these circumstances, the FCA said it expects firms to comply with general consumer protection law including the Consumer Protection from Unfair Trading Regulations 2008.
“This statement makes abundantly clear that mortgage prisoners have been left with second class, inadequate protections when the government sold these [mortgages] on,” the group added.
Inactive lenders, said the group, are likely to argue that the standard variable rate many mortgage prisoners are trapped on is a reversion rate that complies with the terms and conditions of their mortgage.
The campaigners also said John Glen, the economic secretary to the Treasury, had put on a “public show” when he said in January he would consider extending the regulatory perimeter to help mortgage prisoners further.
