A GROUP of MPs has urged the Government to step in to ensure that “mortgage prisoners” are treated fairly.
The call from the All-Party Parliamentary Group (APPG) on Fair Business Banking came after it found that only TSB and the Co-op had actively offered better rates to existing customers and only Nationwide had aligned its rules in line with guidance from the Financial Conduct Authority (FCA) to take on new customers.
Previously the FCA found that around 140,000 borrowers were unable to switch to a better mortgage deal even though they were up-to-date with payments. It changed its rules late last year to allow lenders to assess affordability based on a borrower’s track record of making mortgage payments.
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The APPG said the process by which some former customers of Northern Rock and Bradford and Bingley ended up with active, high street lenders and those that ended up with vulture funds – who serve as no more than debt collectors – was arbitrary. The only possible option for customers stuck with them was to refinance back into mainstream banking which was what the FCA set out to facilitate. However, it appeared that only Nationwide and some of the building societies had tried to address the issues.
APPG chair Kevin Hollinrake said: “It is deeply cynical to laud your corporate social responsibility policies and then refuse to implement guidance from the regulator. It appears that some banks seem determined to evade their clear responsibilities to be good citizens. We call on the Government to intervene to force banks to do the right thing and to prevent any bank from selling off their loan books in future to unregulated vulture funds. The FCA has taken this as far as they can and it is clear that the Government must now step in and ensure that these citizens of our country are treated fairly.”
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