Amendments to the Financial Services Bill written to assist mortgage prisoners were blocked last week by the economic secretary to the treasury.
The Financial Conduct Authority (FCA) had proposed new clauses 24, 25 and 26 in order to extend it’s regulatory perimeter allowing it to regulate the management and ownership of a regulated mortgage contract, to cap the standard variable rate payable by borrowers who can’t switch to another lender and to require lenders to seek written permission before transferring a loan.
The three amendments were blocked by John Glen MP, who acts as economic secretary to the treasury, in a parliamentary debate where he gave no alternative suggestions. He said: “I’m afraid that these amendments risk a number of unintended consequences and would be disproportionate to support a small number of borrowers.”
“It’s important to emphasise that extending the perimeter would not allow consumers to access new deals or cheaper rates that they could not already.
“This amendment not only seeks to extend the FCA’s remit to more firms that engage in mortgage lending, but also to the type of mortgages that are regulated. And this would bring in to regulated scope lending such as buy-to-let lending and would fundamentally reshape the regulation of the mortgage market in the UK.”
Other MP’s have disputed some of the figures that Glen used in the debate and they have since been criticised further by mortgage prisoner campaigners.
Glen claimed that 120,000 of the estimated 250,000 mortgage prisoners had already been helped by the FCA’s move to permit a modified affordability assessment. However this figure was at odds with what the FCA themselves warned at the time of the launch of the assessment, that the measures would only be likely to help around 14,000 borrowers.
Campaigners from the Mortgage Prisoners UK group echoed claims that so far only a handful of mortgage prisoners have been helped, “Mortgage brokers contacted by the campaign group say they cannot help either because they never received a letter from their closed book owner or because after nine years being trapped paying eye-watering rates they no longer pass high street lending criteria,” the group said.
“UK Mortgage Prisoners members have anonymously stated that this amendment is the difference between feeding their children, themselves, or continuing to rely on food banks.
“It now begs the question, why won’t John Glen take action to undo the unforgivable actions from HM Treasury in selling these loans in the first place and finally free mortgage prisoners?”