Treasury Committee welcomes new move for mortgage prisoners

The Treasury Committee has welcomed FCA’s new commitment to consulting on rule changes which will allow the estimated 120,000 “mortgage prisoners” who are with unregulated firms and 20,000 with firms that are inactive, to switch to active lenders. FCA has already acted to help the lesser number of mortgage prisoners who were with active firms. The Committee agreed with Andrew Bailey, when he said that firms need to be willing to offer re-mortgaging opportunities once the barriers are removed, while calling on FCA to remove the barriers as soon as possible. The changes will move the affordability assessment that firms are obliged (since MCD implementation) to carry out from the difficult absolute test to a relative test. The absolute test has caused difficulties as they require the assessment even when customers are not applying for additional borrowings, and FCA has been concerned at the lack of data on many affected borrowers, the fact many of them are on interest only mortgages and those with high LTVs, and that a significant minority may be credit-impaired.

Emma Radmore