FCA: Lenders still failing mortgage prisoners
Speaking at this morning’s Financial Conduct Authority mortgage conference in London Linda Woodall, acting director of supervision, retail and authorisations at the FCA, said she would like to see lenders make greater use of the rules designed to help borrowers stuck on mortgage deals they cannot refinance under the Mortgage Market Review.
She acknowledged that from March next year European rules will outlaw the use of transitional rules to remortgage mortgage prisoners from one lender to another, however, she stressed that the rules will allow a borrower’s incumbent lender to show lenience when assessing their affordability to remortgage.
She said: “When it comes to dealing with the same lender we’ve taken the view that we would like to see firms utilise the transitional arrangements to a much greater extent than they have been doing. That is a common sense approach.”
Kathy Taylor, mortgage technical specialist at the FCA, said the loss of the rule enabling lenders to offer transitional arrangements and looser affordability assessments for mortgage prisoners wishing to move lender would “not be a great loss” as so few lenders had bothered to use them.
She said: “We have seen very little evidence that lenders are using the transitional rules, particularly to take customers from other lenders.
“That’s understandable because if you’re taking a customer on from another lender you are going to want to do some kind of check.
“Under the Mortgage Credit Directive we will no longer be able to allow this rule but there was not a huge swathe of support from the lending community to offer this anyway.”