View more on these topics

AMI hits out at FCA claim that there is no issue with mortgage prisoners


The FCA says the Mortgage Market Review has not locked out borrowers from certain parts of the market – a claim brokers dispute.

Today the regulator published two papers: a feedback statement on its call for input on competition in the market and the findings of its responsible lending review post-MMR.

In the responsible lending paper, it said “We do not find evidence that the rules have prevented firms lending responsibly across particular groups, for example older borrowers and the self-employed except in one niche area of lending [lifetime mortgage where regular payments are made and then switches to roll up] which we have taken steps to address.”

When the MMR was introduced, in April 2014, the regulator allowed lenders to waive an affordability assessment to stop borrowers being trapped on their existing deals. But the assessment can only be waived as long as the customer does not wish to borrow more money, there is no “material impact” on affordability and they have a good payment history.

The MMR allowed lenders to apply the rules to their own customers and customers coming from rivals. However, the Mortgage Credit Directive, which came into effect in March, dictates that lenders must apply an affordability test on borrowers who switch over from a rival, although borrowers staying with the same lender are not affected.

In the responsible lending paper, the FCA said : “Our review found the majority of lenders are using the flexibility afforded by our rules when dealing with their own borrowers who wish to make changes to their mortgage contract. Including, for example, those customers wishing to move to a lower cost contract.”

It said that some lenders apply a full affordability test even though they are not required to.

But it added: “However, if a case is declined, this is often reassessed by an underwriter, and this could result in the decision being overturned. In a limited number of cases we saw that customers had to appeal before the application was reassessed by an underwriter.”

The claim comes less than a week after MoneySavingExpert founder Martin Lewis met with the Chancellor to push him to take action to help mortgage prisoners.

Association of Mortgage Intermediaries chief executive Robert Sinclair hit out at the FCA’s findings.

He says: “It is great news that the FCA has found that the mortgage market is now lending responsibly and that there are no issues with mortgage prisoners. This appears at odds with broker experience and that of the renowned consumer champion Martin Lewis, so no doubt the Chancellor will be assured by the FCA there will be no issues when interest rates rise.

“AMI considers that there remain underserved groups of borrowers in the areas of interest-only, lending into retirement, self-employed, contract workers, foreign currency earners and expats that still need attention if the market is to serve the whole.”

Sinclair added that he was disappointed the FCA felt it necessary to conduct a full-blown market study on competition instead of opting for thematic work and supervisory action.

He said: “Some might applaud the FCA decision to challenge the results of its own MMR, but AMI is concerned that this will only introduce uncertainty into what is still a fragile market.”



Treasury to intervene on mortgage prisoners

The Treasury is investigating how to help hundreds of thousands of mortgage prisoners trapped on their deals following the Mortgage Market Review. The Chancellor met with Money Saving Expert’s Martin Lewis today on the issue and other industry experts have been raising this with the Treasury. The so-called ‘transitional arrangements’ written into the MMR allow […]


Mortgage prisoners turning to equity release

Mortgage prisoners with interest-only loans are increasingly turning to equity release, according to Key Retirement. The firm’s latest Market Monitor says that 40 per cent of equity release customers took out a lump sum in the first quarter of 2016, compared to 30 per cent in the same period last year. Equity release customers released […]


Mortgage prisoners hit as FCA reveals MCD final rules

Mortgage prisoners have received a blow after it emerged lenders will be forced to apply affordability checks on all remortgage customers who come from rivals to comply with the EU’s Mortgage Credit Directive. In a paper documenting the FCA’s final rules on the implementation of the directive, the regulator said it had noticed a “conflict” […]

Europe: Nursery slopes

After a flat year for European equities, in which the Artemis European Growth Fund outperformed, manager Philip Wolstencroft is (cautiously) optimistic about 2016.


News and expert analysis straight to your inbox

Sign up