We aim to make our website as accessible as possible. However if you use a screen reader and require debt advice you may find it easier to phone us instead. Our phone number is 0 8 0 0 1 3 8 1 1 1 1. Freephone (including all mobiles).
StepChange Debt Charity logo
Go

Our response to the FCA’s mortgage customers: Proposed changes to responsible lending rules and guidance

We support the FCA’s principle of making it easier for some people who are currently unable to switch (“mortgage prisoners”) to be able to move to more affordable mortgage deals.

However, we note that few of our clients (who would potentially benefit from switching) would be able to take advantage of the proposed changes.

No support for those with mortgage arrears

Those of our clients with mortgage arrears will remain ineligible to move to a more affordable deal, either with their current lender or another provider, under the current “up-to-date” with payments over the previous 12 months clause. These clients are financially vulnerable and working with us to repay their mortgage arrears.

A more affordable mortgage deal would ensure they could repay arrears more quickly and/or reduce any other debts or arrears. The FCA should consider how better outcomes for these customers could potentially be achieved, over and above current forbearance rules.

No obligation on lenders to offer better deals

There is also no obligation on lenders to offer better deals to “mortgage prisoners” who are currently trapped on high standard variable rates. Some active, regulated lenders have not signed up to the voluntary agreement to offer lower rates to existing mortgage customers.

On top of this, the offer of a better deal to new customer “mortgage prisoners” is purely dependent on the commercial risk appetite of the lender. Although the negotiation of the voluntary agreement amongst authorised lenders is a positive step forward, it doesn't address the problems of those customers of inactive lenders or unregulated firms who are currently unable to switch.

Our recommendations

The FCA has already accepted the principle of price intervention where vulnerable consumers are concerned (in the rent-to-own credit market). We recommend a similar approach in the mortgage market.

In the case of authorised lenders, it's within the FCA’s current powers to provide a more effective solution. In the case of mortgage loans that have been sold to firms that aren't authorised for mortgage lending, so currently outside the FCA’s control, there's a case for the FCA to work with HM Treasury to support new legislation to ensure this detriment is stopped and prevented from affecting current and new mortgage customers in the future.

If it's agreed that mortgage lending should be regulated, it should be the whole mortgage market that's covered by this regulation.

Read our full response and recommendations.

Download our response

Helping you become debt free...

“I wish to thank your staff for all the great help they gave me when I was in so much debt.
They were a pillar of support to me.” (Leslie, Essex)

Foundation for Credit Counselling Wade House, Merrion Centre, Leeds, LS2 8NG trading as StepChange Debt Charity and StepChange Debt Charity Scotland. A registered charity no.1016630 and SC046263. It is a limited company registered in England and Wales (company no:2757055). Authorised and regulated by the Financial Conduct Authority.

We link to external websites where they contain relevant information for our visitors. We're not responsible for the content of these websites, or any infringement on your data rights under data protection regulations by any external website provider.

*This is the average rating of our service based on the StepChange reviews on Feefo by DMP and DRO clients three months into their solution.

© StepChange Debt Charity 2019