Mortgage networks and directly authorised firms have backed the Financial Conduct Authority’s call for intermediaries willing to help mortgage prisoners, but concerns remain about the measures put in place to help trapped borrowers.
Shortly after the regulator announced its advice initiative, Quilter answered the call and said it “[stood] ready” to help mortgage prisoners access more affordable options.
However, it warned while the FCA’s new rules allowed lenders to assess affordability based on a borrower’s track record of making mortgage payments, lenders had “struggled to make the necessary changes”.
Quilter warned these challenges could be increasingly difficult, as lenders now had to “deal with the fallout” from the coronavirus.
It said: “This makes it even more important to have a financial adviser who has knowledge of the market and options available”.
On July 9 the FCA issued a call for intermediaries willing to work with mortgage prisoners to help them identify and move to an active lender where possible, or signpost them to additional support, such as debt advice.
Mortgage prisoners who may be able to switch to a better deal will be able to access an alphabetical list of mortgage intermediaries, which will appear on the Money and Pensions Service website.
The regulator 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.
Charlotte Nixon, proposition director at Quilter Financial Planning, said: “Expert financial advice can be a fantastic tool for mortgage prisoners but will not necessarily be a silver bullet.
“Without lender support and a proliferation of mortgage products aimed at these customers, it is going to be difficult to move these people into more suitable products even with financial advice. As intermediaries we are committed to helping this type of customer, but it requires solutions from the whole industry rather than just one segment of it.”
Ms Nixon added that the response from the adviser community could result in the list of intermediaries running into the hundreds, which could lead to mortgage prisoners finding it difficult to know who to contact.
Gail Smyth, principal mortgage consultant at Charles Mac, said she believed the eventual list should be compiled based on location rather than alphabetically, “so that clients are working with brokers that really know their area in terms of property values and other criteria”.
Similarly Alex Hill, head of business standards and risk at mortgage network Stonebridge, added whether the list would be effective in helping mortgage prisoners depended on whether it is a “simple alphabetical list or has some search functionality to assist consumers in making a choice”.
Regardless, Mr Hill said Stonebridge would be submitting an expression of interest to appear on the list.
He said: “This is an opportunity for consumers to receive expert advice when they possibly haven’t done so for a period of time, and we’d like to be a part of that”.