A growing number of homeowners are trapped with their current mortgage (and provider), despite being up to date with their mortgage payments, and are unable to remortgage to other lenders offering mortgage products on more favourable terms. These homeowners have been dubbed “mortgage prisoners”. This has been an issue in the past and has become an increasingly prevalent problem in the UK. The Financial Conduct Authority (FCA) has therefore stepped up their involvement to resolve the issue.

What the FCA is proposing

In their recently published Mortgages Market Study report, the FCA proposed new rules governing how mortgage providers evaluate potential customers, which would enable these mortgage prisoners to secure better deals with other providers.

The new proposals will allow lenders to undertake more proportionate affordability assessments for customers who are seeking better rates for their current home mortgage, are not looking to borrow more, and are otherwise up to date with their mortgage payments. Lenders will check that any customer looking to remortgage has made payments on time for the past year, and that their new deal has lower monthly repayments and interest rates.

Further proposals for the mortgage market

The FCA has also made a series of other proposals to help customers in the mortgage market. These include:

• Relaxation of affordability assessment rules, as mentioned above.
• Making it easier to choose the right mortgage with the development and implementation of new tools designed to give customers greater advice and feedback on their eligibility and the affordability of different mortgages.
• More guidance for customers when choosing a mortgage broker. Given the significant impact mortgage brokers can have on how much their customer will ultimately pay for their mortgage, the FCA wants to provide easier access to unbiased information about different mortgage brokers.
• Lenders should make it simpler to switch deals. According to the FCA, around 800,000 homeowners are paying a ‘loyalty penalty’ by not switching providers after the end of their introductory rate. The FCA wants to work with providers to make it easier for customers to switch to better deals.

Complying with the FCA rules with the help of Richdale Consultants

With the introduction of these new rules to help “mortgage prisoners”, making the mortgage market easier for customers to navigate in general, it’s imperative that lenders and their intermediaries are fully equipped to comply with the FCA’s existing regulations, and are prepared for any updated or new regulations that may be implemented down the road.

At Richdale, we work with you to achieve and maintain complete compliance in line with current FCA regulations and those which are slated to take effect in the future. In addition, we recommend best practice measures as well as proposed regulatory changes which are likely to take effect in the future. This will help you not only stay on track, but ahead of the game.

We offer experienced and personable consultancy services to intermediaries and provide all the necessary ongoing support to manage their regulatory obligations. Our team will be delighted to offer you a free, impartial consultation on your compliance requirements; get in touch with us today to get started on your compliance journey.