ao link
0 £0.00
This item was added to your basket
Credit Strategy homepage
Intelligence, Insight and community for responsible professionals in credit

FCA to consult on “mortgage prisoners”

The Financial Conduct Authority (FCA) is to launch a consultation on improving switching options for mortgage customers who are currently unable to do so, the regulator’s chief executive Andrew Bailey has confirmed.

In a letter to Nicky Morgan MP, chair of the Treasury Committee, Bailey revealed that there are 150,000 mortgage customers in the UK who fall into the category of ‘mortgage prisoners’.


FCA analysis found that of that 150,000, there are:

  • 10,000 customers with active, authorised lenders;
  • 20,000 with firms that are no longer lending commercially, despite being authorised to do so;
  • 120,000 customers of firms that are not authorised to lend.

As far as lenders with active, authorised lenders are concerned, the FCA proposed that lenders should commit to allowing customers up to date with their repayments and who are not looking to borrow more to switch to a cheaper deal.


Bailey added that for the remaining customers with inactive or unauthorised customers, the priority should be to switch to an active, authorised lender with whom they may be able to get a better deal.


He adds that the forthcoming consultation, which will likely be put forward in the spring, will focus on potential changes to the body’s responsible lending rules “with the aim to deliver a more proportionate affordability assessment”.


“We intend to move the affordability assessment from an absolute test to a relative test,” he writes.


“Thus, the test would be whether the mortgage costs are more affordable than the current mortgage costs.


“Our focus will be on those customers who are seeking to move to a cheaper mortgage and are not borrowing more to ensure that a new mortgage is more affordable for these customers.”


Responding to Bailey’s letter, Morgan wrote: “These customers are trapped on a far higher interest rate than is necessary through no fault of their own. The regulator must now act swiftly to help these mortgage prisoners, and not use this consultation to kick the issue into the long grass.”


Jackie Bennett, director of mortgages at UK Finance, said: “It is a positive step that the FCA has set out the action it will take to help those customers stuck on reversion rates who are with inactive or unregulated lenders.


“The FCA has noted the progress made through the industry’s voluntary agreement to help borrowers with active lenders switch to a better deal.


“But it has also recognised that regulatory changes are needed to remove the barriers to helping the thousands more customers who are currently with inactive and unregulated lenders.


“We will continue to work constructively with our broad range of members and the FCA to help ensure those customers who want a like-for-like mortgage can switch lenders more easily.”

Please login to continue reading this article.

Not a member?

Become a member

FREE registration. No credit card required

Register now
  • Stay up-to-date with industry news and appointments
  • Hear about events first
  • Read 1 free Premium article per month

Become a premium member

From as little as £3.48 per week

Become Premium
  • All the perks of a standard member plus:
  • Access to the entire Credit Strategy website
  • 12 months subscription to Credit Strategy Magazine
  • 25% discount to all conferences
  • Exclusive access to Premium Member only roundtables
  • 50% off award entry fees


Upcoming events

Credit Strategy
LinkedIn page

Member of

Did you find our website useful?

Thank you for your input

Thank you for your feedback – an online news and information service for the UK’s commercial and consumer credit industry. is published by Shard Financial Media Limited, registered in England & Wales as 5481132, Axe & Bottle Court, 70 Newcomen St, London, SE1 1YT. All rights reserved. Credit Strategy is committed to diversity in the workplace. @ Copyright Shard Media Group