The FCA has published the terms of reference setting out the steps it will take in its mortgage prisoners review.
Data review: the FCA will review and update its data to consider the demographic and loan characteristics of mortgage prisoners. The FCA expects that the change in economic conditions due to Covid-19, more recent data and updated assumptions are likely to lead to an increase in the estimated number of mortgage prisoners.
Interventions review: the FCA will also review the effect of its recent interventions to remove regulatory barriers to switching. It will consider:
- What effect its modified affordability assessment and the lender switching options prompted by this, had on borrowers with inactive firms:
- being able to switch
- receiving other support, eg referrals to debt advice
- The effect of its intra-group switching rule change. This is intended to make it easier for borrowers in closed books – where the firm is no longer lending – to switch to a mortgage with an active lender within the same financial group.
The FCA’s review will take place between July and October 2021, including stakeholder engagement in July and August. Following the review, the FCA will report to Treasury and expects this to be laid before Parliament by end-November 2021.