Opinion  

It’s time for the FCA to stop talking

Ashley Wassall

You are probably fed up of hearing this, dear reader. I know I’m fed up of saying it, and the regulator says it so often now it’s become sanitised, little more than moderately soothing background noise.

So it is time for the talking to stop: the Financial Conduct Authority needs to do something about lenders flouting new mortgage affordability tests.

This week we sent a reporter along to the Council of Mortgage Lenders annual conference to hear Linda Woodall, the watchdog’s director of mortgages and consumer lending, speak on the Mortgage Market Review.

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From the resulting transcribed speech we had two options for a ‘hook’ on which to peg our write-up: the intervention of the Bank of England to limit lending at high income multiples does not undermine MMR, or the regulator’s continuing unease over the “disappointing” disregard of transitional rules under the regime, to the detriment of customers.

I wasn’t keen on the first option, not least because it is uninspiringly intuitive. Of course the FPC intervention to cool the jets of what was fast becoming a runaway housing market are in accord with an overhaul of rules designed to achieve, well... precisely that.

The problem with the second option is it sounds naggingly familiar. With good reason.

As long ago as April, we reported on adviser concerns that many lenders may be going beyond requirements to conduct more stringent affordability tests as required under the MMR, by ignoring transitional exemptions granted to those porting under existing terms or downsizing their borrowing.

We even had Natwest on the record at the time stating that it officiously treats existing, downsizing customers as new business, many of whom inevitably fail the strict test and face being stranded on a higher standard variable rate or paying hefty exit penalty fees.

Natwest is not alone, as the vitriolic response to a comment I wrote on the subject back then attests.

The nationals have since got involved, with consecutive stories in the Daily Telegraph’s weekend ‘Your Money’ section five months after the new rules came in highlighting the plight of trapped borrowers, including those unable to exercise porting clauses enshrined in their original contract.

In the wake of drum-beating from the press corps, the FCA has also admirably acknowledged the issue a number of times. Lynda Blackwell, head of mortgages, stated during a live FTAdviser debate in September that the regulator was monitoring the practice and reminded lenders of their “responsibility to treat customers fairly”.

Since then, Ms Woodall has made similar murmurings during interviews with other outlets, confirming all the while that the organisation is still in observation mode and has not yet raised the alert level. Then we get these latest comments, again with no suggestion of intervention.

So, yes, not new. But perhaps all the more newsworthy for that very reason - and worth raising again here.