View more on these topics

FCA claims there is no issue with mortgage prisoners


Despite broker claims, the FCA says the Mortgage Market Review has not locked out borrowers from certain parts of the market.

Yesterday 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.”


FCA logo new 3 620x430

FCA to review mortgage advice rules

The FCA will investigate whether its rules around advice reduce competition in the market. Following a call for input on competition in the mortgage market, the regulator has published a feedback statement today saying where advice is lengthy and does not engage the customer, competition can suffer. However, it did stress that its rules on […]

FCA logo new 620x430.jpg

FCA warns on mortgage network panels and commercial deals

The FCA has raised concerns that commercial deals along the mortgage supply chain and the dominance of networks pose a risk to competition in the mortgage market. The regulator has published two reports today on whether the mortgage market is working effectively for borrowers. In the first report, the FCA says following the Mortgage Market […]


Treasury to intervene on mortgage prisoners

The Treasury is investigating how to help hundreds of thousands of mortgage prisoners trapped in 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. So-called transitional arrangements written into the MMR allow lenders […]

IHT: What were you doing in 2009?

One of the best sources of new business is your existing clients and, if they are estate planning clients, regular reviews are needed because people’s inheritance tax (IHT) problems tend to only get worse. Now, not a lot of things remain at the same rate as in 2009. If we turn the clock back, it […]


News and expert analysis straight to your inbox

Sign up


There are 6 comments at the moment, we would love to hear your opinion too.

  1. That’s mortgage prisoners sorted out then. Excellent. Just say the words and it becomes reality. Never mind the evidence. Ho hum.

  2. Are the FCA absolutely bonkers!!! They have created a world under RDR that the people who most need advice cannot afford to get it and their answer is to allow the banks to set up direct sales forces again, therefore encouraging mis-selling. Under MMR they have created a massive problem of mortgage prisoners and they seem to believe, if they whistle loud enough, they cannot hear the outrage that is coming and therefore the problem does not exist. No doubt when the problem becomes a stampede, they will then change the rules, and say it is everybody else’s fault.

  3. Stuart Gregory 17th May 2016 at 12:28 pm

    Had to wait a while before commenting, you know so the laughter subsided a bit.

    Where did they find these underwriters who were ‘willing to review’ after initial decline??

    ‘No issue with Mortgage Prisoners’ – ah yes, that’ll be the ones who get told by a well known Spanish bank that they can’t move home (just porting what they have) even though their income/expenditure hasn’t changed – ‘because our criteria/assessment has’.

    Just wait until there’s finally a(nother) threat of rates rising from Carney – when remortgaging market finally picks up, THAT’S when the chickens come home to roost.

    Tick….tock…..ignore at your peril.

  4. Dear FCA, I prefer my jokes on a Friday afternoon.

    Regulation is bust.

  5. As one myself, now released, having been been able to sell as the term end came to early to settle as no alternative was available to self employed on same terms I can categorically refute the FCA findings and can with evidence prove extortion of the borrower through mortgage prisoner situation is in full swing. The banks are sitting pretty often on 40% LTV and can only rub hands with glee on the impending repossessions. My experience with the ombudsman is that they support this action in general under the general term imposed by the banks as ‘fiscal leverage’.

  6. As usual eyes wide shut!

Leave a comment


Why register with Money Marketing ?

Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

News & analysis delivered directly to your inbox
Register today to receive our range of news alerts including daily and weekly briefings

Money Marketing Events
Be the first to hear about our industry leading conferences, awards, roundtables and more.

Research and insight
Take part in and see the results of Money Marketing's flagship investigations into industry trends.

Have your say
Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

Register now

Having problems?

Contact us on +44 (0)20 7292 3712

Lines are open Monday to Friday 9:00am -5.00pm