In its Mortgage Rule Review, the Financial Conduct Authority (FCA) said perpetrators could use a joint mortgage to force victims into arrears and refuse to pay their agreed share, agree to better mortgage terms or sell the property.
It said many firms had processes to support those suffering economic abuse.
Currently, a borrower’s name can be removed from a mortgage, and an affordability assessment can be conducted to see if a victim-survivor is able to keep the property in their sole possession. However, there may be instances where a court orders the abuser to transfer their share in the property to the other party, but it is not affordable to do so.
It said borrowers in financial difficulties could go to their lender to agree to a reduced payment for a period of time. However, the FCA said this could cause borrowers to accrue arrears, which could damage their credit rating.
The FCA said it received feedback to suggest that its rules did not always support people facing financial control or abuse, and more clarity was requested on when affordability assessments would be needed.
Mind the affordability gap
Sponsored by Newcastle for Intermediaries
It was suggested that the FCA streamline its rules and adopt a principles-based approach to affordability to improve customer outcomes and reduce barriers where there is economic abuse and a payment shock is unavoidable.
