FCA’s guidance for firms supporting their existing mortgage borrowers impacted by the rising cost of living - Which? response

Which? supports existing FCA rules and guidance that require mortgage lenders to take a tailored approach to helping their customers through financial difficulty. The FCA’s latest guidance for mortgage lenders helps to further clarify its expectations of firms when responding to increased levels of financial difficulty caused by the rising cost of living. However, given the failings that the FCA has recently found with mortgage and consumer credit providers, it is robust supervision and timely enforcement of existing FCA rules that is most urgently required.

We support firms using data or automation to help identify customers at risk and together information on their personal circumstances. However, the FCA will need to be very careful how forbearance offers made to a group of customers with seemingly similar needs and circumstances is supervised, particularly when offered via automated processes.

Beyond introducing this guidance, the FCA should:

• Conduct a review of the fees and charges levied by some lenders on borrowers in financial difficulty.
• Continue to monitor the mortgage market and step in as appropriate without delay.
• Address the longstanding harm experienced by mortgage prisoners, intervening to require banking groups with an inactive lender to treat these customers fairly and offer them a mortgage deal equivalent to those offered to their other customers.