FCA looks for brokers willing to help mortgage prisoners

FCA looks for brokers willing to help mortgage prisoners

The Financial Conduct Authority (FCA) has issued a call for mortgage intermediaries who are willing to help mortgage prisoners find a better deal.

The brokers would be expected to help mortgage prisoners identify and move to an active lender where possible, or signpost them to additional support such as debt advice.

A list of intermediaries is being compiled that will appear on the Money Advice Service website, although customers will also be able to approach intermediaries who do not appear on the list.

Mortgage prisoners are customers who have previously been unable to switch mortgages despite being up-to-date with their payments.

According to the All Party Parliamentary Group on Mortgage Prisoners, mortgage prisoners “are vulnerable and could be stuck with a lender which will exploit them by keeping them paying a high interest rate, not give them any new deals or fixed rates and not show them any flexibility”.

The FCA said mortgage intermediaries had a “key role to play” in supporting mortgage prisoners, from learning of the option to switch, to being able to apply for a new product.

It estimates around 14,000 borrowers should be both likely to meet firms’ commercial lending criteria and stand to make a meaningful saving.

Listed intermediaries will be updated by lenders on any bespoke offerings for mortgage prisoners, as well as any changes to criteria or underwriting.

The FCA has asked intermediaries, who are interested in appearing on the list, to submit an expression of interest by August 6 to the Money and Pensions Service, and to confirm they meet the necessary criteria.

Those who do not meet the criteria but wish to be listed can contact the regulator.

Expressions of interest will be accepted from directly authorised firms, as well as the authorised principal firm of appointed representative (AR) networks.

ARs are advised to approach the principal firm first if they wish to be part of the initiative.

Research on mortgage prisoners by the FCA showed around 250,000 people were in closed mortgage books, or had mortgages owned by firms that are not regulated by the FCA.

However, the regulator also found that around 170,000 of these borrowers were up-to-date with payments and would be eligible to switch under the FCA’s new rules, which allow lenders to assess affordability based on a borrower’s track record of making mortgage payments.

The rules were introduced in 2019 to remove barriers that stopped some customers from finding a cheaper deal.

In May the FCA offered lenders a three-month extension in which to contact mortgage prisoners about switching to a better deal, due to the impact of the coronavirus on the market.

Eligible customers will be contacted by December 1, typically by letter encouraging them to visit the Money Advice Service website.

Customers who may be able to remortgage will then be able to access a list of mortgage intermediaries who will work with them and provide the support that they may need.