The review aims to improve the data available about mortgage prisoners and to assess the effectiveness of two interventions that were supposed to have helped the trapped borrowers.
On data, the FCA and Treasury will collaborate to produce new information with more detail on the demographics and loan characteristics of mortgage prisoners. They will make use of latest product sales data and credit reference agency data.
The FCA will also review how it has produced figures saying how many mortgagees with inactive firms are unable to switch despite being up-to-date with payments. It admitted that July 2020 assumptions led to “a low estimate” and that use of latest data – including taking account of economic shifts during the pandemic – would likely result in a higher number.
As to interventions, it will review the effects of two interventions, namely modifying affordability assessments and a rule change on intra-group switching.
The affordability change review will look at take-up of resources and support from mortgage brokers who have agreed to provide advice to mortgage prisoners, and will consider Money and Pensions Service and FCA product sales data.
The regulator will also look at the extent of borrowers switching within lending groups.
The review is happening from July to October, with stakeholder engagement expected in July and August.
The resulting report to Treasury will be put before Parliament by the end of November.
Rachel Neale, lead campaigner at UK Mortgage Prisoners, said: “Looking into the characteristics of mortgage prisoners is a way to victimise us, saying we are people who shouldn’t have borrowed what we did or how we did it.
“These products were regulated by the FCA. And anyway, it was not the products that landed us in this mess. It was a failure by Treasury to put in place adequate protections when it sold the mortgage books.”
The group was grateful to be invited by FCA to participate in stakeholder discussions, but feared the review would be the latest in a series of moves by Treasury “to kick the can down the road,” Neale said.
“Nothing will happen until at least next year. This is winding down the clock until people lose their homes, come to end of term, or die,” she added.