View more on these topics

FCA finds adviser communication shortfalls in interest-only mortgages probe

Home-Houses-Different-Mortgage-Rent-700.jpgInterest-only mortgage customers can have trouble getting to speak with advisers, having to call multiple times and repeating information previously provided, the FCA found in a thematic review.

The regulator announced a thematic review of interest-only loans last April in its 2017/18 business plan.

The regulator published its findings today and is urging lenders to do more to tackle the issue of maturing interest-only mortgages with no repayment strategy.

Nearly one in five mortgage customers have an interest-only mortgage and the FCA is worried that shortfalls in repayment plans could lead to people losing their homes.

The regulator says lenders have been proactive in contacting the 1.67 million interest-only customers in the UK.

However, it says customer engagement rates are low. It says lender engagement is based on writing to customers, and this could be improved.

An FCA statement says: “Where lenders tailored their work to the different customer types identified, they were able to increase contact with those considered higher risk.”

The FCA also found that many customers found the process of following repayment options difficult.

The regulator also found problems with customers getting to speak to advisers, making multiple phone calls and repeating information previously provided.

FCA executive director of supervision – retail & authorisations Jonathan Davidson says: “We know that many customers remain reluctant to contact their lender to discuss their interest-only mortgage for a variety of reasons.

“We are encouraged to see that lenders have taken positive steps to engage with and help their interest-only customers. However, as the number of maturities start to increase towards 2032, it is important that lenders take time to review and, where possible, improve, their own strategies.”

Full interest-only and part capital repayment mortgage accounts outstanding make up 17.6 per cent of all outstanding mortgage accounts.

The FCA review covered 10 lenders who represent around 60 per cent of the interest-only residential mortgage market.

It looked at how lenders are treating these customers to help ensure their mortgages are repaid at maturity.

Recommended

House-Home-Protection-Mortgage-700.jpg

Mortgage adviser launches robo service

JLM Mortgage Services has launched the first stage of its new ‘robo advice’ service. The mortgage and protection network claims it is the first network to launch such a tool to its members. The Virtual Adviser will allow member brokers to offer an online service to residential and buy-to-let customers. This service will offer an […]

Tenet hires MD for mortgage and protection network

Tenet has hired Simon Broadley as adviser propositions director as well as to lead its mortgage and protection network, Tenet Lime. In his adviser-focused role, Broadley will be responsible for working on what Tenet offers to its members. Broadley joined Tenet on 4 January from Yorkshire Building Society Group where his most recent role was […]

barclays-building-2012-700x450.jpg

Barclays staff raise concerns over pension scheme security

The work and pensions secretary Esther McVey has been urged to intervene to protect the pensions of over 200,000 current and former Barclays staff as the UK bank reorganises its pension scheme. Concerns have been growing from the bank’s members over the decision of Barclays to transfer responsibility for pensions to the international and investment banking arm […]

Tax-Taxation-Blocks-700.jpg

Your top 5 queries about chargeable events

So far this year, members of Canada Life’s ican technical team have answered over 3,000 queries from advisers on a wide variety of subjects. One of the main topics of conversation has been chargeable events, and below are the top 5 most common queries. No. 1. Entitlement to personal allowances The growth in the value […]

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

    Leave a comment