The Association of Mortgage Intermediaries has slammed the Financial Conduct Authority for failing in its duty to protect consumers.
In its latest Economic Bulletin AMI said that its members had repeatedly and consistently reported that they had to turn existing borrowers away because lenders simply wouldn’t cater for them on a remortgage.
In the report AMI said: “We are strongly of the view that lenders and the Financial Conduct Authority continue to fail mortgage prisoners, refusing to acknowledge those who have no options when wishing to remortgage.”
In May this year the FCA published its Responsible Lending Review into mortgage lending decisions and the Feedback Statement following the October 2015 Call for Inputs on competition in the mortgage sector.
At the time FCA director of competition Deborah Jones admitted in an interview with Mortgage Introducer that the work done to date by the regulator considered only those borrowers who have been approved for remortgage – not those who had been rejected.
She said: “The scope of this review considers whether the rules are working well for consumers so we have looked at where the rules have been used.
“We are conducting a market study later this year and plan to consider whether customers are getting good outcomes as a result of those rules.”
She admitted that the regulator “hadn’t looked at whether trapped borrowers exist or don’t – we are just looking at the rules and their flexibility”.
AMI’s report claimed that its members said brokers are seeing “many, many borrowers who continue to struggle to remortgage – despite transitional arrangements still in place even following the Mortgage Credit Directive implementation”.
It said borrowers in the areas of interest-only, lending into retirement, self-employed, contract workers, foreign currency earners and ex-pats were worst affected.
AMI added that it “believes that the agenda is now shifting and that others share AMI’s view that a wave of invisible mortgage prisoners exists and these ostracised borrowers require better support from mortgage providers”.
Its research suggests that up to one million mortgage prisoners are being neglected by the FCA and lenders because they do not fall within the remit of the regulator’s review of responsible lending.