Press Comment: Andrew Bailey's letter
to Nicky Morgan about mortgage prisoners
10 January 2019
If you are covering the FCA’s correspondence with MP Nicky Morgan about how they hope to fix the problem of mortgage prisoners, please see the following comment from Gemma Harle, managing director of Intrinsic mortgage network, part of Quilter:
“Andrew Bailey’s letter to Nicky Morgan published today encouragingly shows that the FCA is entering into the new year still determined to find a solution to the absurd situation that mortgage prisoners find themselves in. In his letter to the chair of the Treasury committee he sets out that the regulator will be looking offer mortgage prisoners a helping hand by delivering more proportionate affordability assessments in the future so people stuck on expensive standard variable rates can switch to a cheaper deal.
“Thankfully we will not have to wait too long to get more clarity on how this will work in practice as he spells out that the FCA’s position on this important subject as it will be published alongside the Mortgage Market Study in the spring. This is a complex situation but the FCA seems committed to stamping out the bizarre situation they estimate 150,000 people suffer with in the UK.
“While the FCA has already set out some measures in their interim report to solving the mortgage prisoner conundrum for active lenders, the problem is more complex when it comes to inactive lenders or unregulated firms. This issue has been high on the agenda at the back-end of last year with economic secretary to the Treasury and MP John Glen stating in November that there might have to be a change in the law to aid mortgage prisoners with closed book lenders such as Bradford and Bingley and NRAM.
“Similarly, although new challenger banks and lenders inject new opportunities and offer customers greater breadth they can be more susceptible to economic conditions which cause them to fold in turn creating a new breed of mortgage prisoner. For example, we have recently seen some lenders apply to get their permissions removed which could leave customers in a tricky position. The FCA needs to simultaneously act to tackle the age-old mortgage prisoner problem while making sure that new customers don’t suffer when new players in the market go out of business. A communication plan is essential so that these customers left in the lurch are supported.”