The FCA has asked for intermediaries to take a role in supporting the customer journey in switching to a better rate.
The Financial Conduct Authority (FCA) has called for intermediaries to come forward to work with mortgage prisoners, and Quilter Financial Planning is one of the businesses to answer the call.
The FCA has identified that around 170,000 borrowers with mortgages in closed books or owned by unregulated entities, would be eligible to switch mortgages under the new rules added to the Mortgage Conduct of Business (MCOB) rules in October 2019.
The rules allow lenders to assess affordability based on a borrower's track record of making mortgage payments, and the FCA predicts that around 14,000 should be likely to meet firms' criteria and stand to make a meaningful saving.
The FCA has asked for intermediaries to take a role in supporting this customer journey.
Quilter Financial Planning has outlined its support for the FCA, and its own willingness to help mortgage prisoners access more affordable options.
However, the firm pointed out that lenders have struggled to make the necessary changes since the new rules came into place, and this may only worsen as the market focuses on COVID-19 recovery.
Gemma Harle, managing director of Quilter Financial Planning, said: “COVID-19 has had a dramatic impact on the nation’s finances, and many will find themselves struggling to make ends meet in this challenging time.
"But for many mortgage holders who are trapped paying over the odds, the ramifications of the last crisis are still being felt as they are unable to switch to a better deal thanks to the affordability rules introduced in the wake of the 2008 crisis.
“What the rules are effectively saying is that these borrowers cannot afford to pay less each month.
"This is illogical, and Quilter is ready to support these customers throughout the entire journey, to help them find a better deal or guide them to other solutions and debt advice if necessary.
“But the elephant in the room remains. The FCA’s new rules will only be effective if lenders are willing to apply the new assessment and offer a product for mortgage prisoners to allow them to switch.
"In the current economic environment, where many high-street banks have been forced to set aside considerable amounts of capital for impairment losses, it is unlikely they will be making the changes anytime soon.
“However, all is not lost for this group. In some instances, there may be scenarios that people think they are mortgage prisoners, when in fact there are other options available.
“This group should never have been put into this position and it is unthinkable they remain in it.
"We will do as much as we can to support people harmed, but lenders and the regulator need to work together to help as far as they possibly can and ensure this never happens again.”
Gail Smyth, principal and founder of Charles Mac, a member of Quilter’s network, added: “This is an issue close to my heart having worked closely with groups campaigning on behalf of mortgage prisoners over the past few years.
"Time and time again we hear devastating stories of the financial and emotional impact of being a mortgage prisoner and it is not right that this is allowed to continue.
“Advisers are well placed to do the heavy lifting for mortgage prisoners and offer potential solutions.
“We are supportive of the FCA’s call for intermediaries to support mortgage prisoners and believe the eventual list should be compiled based on location, so that clients are working with brokers that really know their area in terms of property values and other criteria.”
