On 9 January 2019, the FCA published a letter that it had sent to Nicky Morgan MP, Chair of the Treasury Committee. The letter provides an update on the FCA’s work on improving switching options for mortgage customers who are currently unable to do so.
The FCA states that over the coming months it will work on the practicalities of re-mortgage options and how these options will be communicated to affected customers. A consultation paper setting out proposals to remove regulatory barriers to switching for these customers will be published alongside the final report of the mortgage market study this spring.
Commenting on the correspondence, Rt Hon. Nicky Morgan MP, Chair of the Treasury Committee said:
“The Treasury Committee has consistently raised the problems of mortgage prisoners with the Government and the FCA. Under pressure from the Committee, the FCA has worked with industry and established a voluntary agreement, which allows most of the 10,000 mortgage prisoners of active lenders to switch to a better deal. Whilst help for these customers is a welcome step, there remain 120,000 mortgage prisoners with unregulated firms, and 20,000 with regulated but inactive firms. These customers are trapped on a far higher interest rate than is necessary through no fault of their own. The FCA has today announced that it will consult on changing its lending rules to allow such customers to switch to an active lender, with whom they may be able to get a better deal. The regulator must now act swiftly to help these 140,000 mortgage prisoners, and not use this consultation to kick the issue into the long grass. We will raise these issues when we take evidence from the FCA next week.”