The FCA’s proposed changes to help mortgage prisoners find cheaper loans may come too late for some families, Treasury select committee chair Nicky Morgan has warned.
Morgan welcomed confirmation today that the FCA is planning to reform affordability rules to help lenders offer better deals to these borrower.
But she says the reforms are unlikely to be a “panacea” and called on industry to “step up” and make use of the changes to help borrowers.
She also raised concerns about the length of time it would take to implement the new rules and hinted that the government might need to look at further action if the changes are not successful.
Morgan says: “Thousands of customers are trapped on a far higher interest rate than is necessary through no fault of their own.
“Following constant pressure from the Treasury Committee, this confirmation of the FCA’s decision to act is welcome.
“The FCA’s proposals should make it easier for some mortgage prisoners to switch to new providers.
“But the FCA’s rules apparently aren’t expected until towards the end of the year. For some families, this may be too late.
“Speed is of the essence in this case, and every month will count.”
Morgan adds: “This will not be a panacea for those ‘mortgage prisoners’ who are in arrears, or are regarded as ‘risky’ for other reasons.
“Some of those may have been pushed into arrears due to the high rates they pay. That may require more thought by government.
“Lending is a commercial decision so the FCA cannot force firms to lend to these mortgage prisoners.
“But once the regulator’s new rules have come into force, industry should be ready to step up to help those borrowers that meet their risk profile.”