CP19/14: Mortgage customers: proposed changes to responsible lending rules and guidance

Open consultation: CP19/14
Consultation closes
Policy Statement
Q4 2019

We are proposing changes to our rules to reduce regulatory barriers to consumers who are up-to-date with payments and not looking to borrow more switching to a more affordable mortgage.

Read CP19/14 (PDF)

The Mortgage Market Study found that some consumers cannot switch to a more affordable mortgage despite being up-to-date with their mortgage payments. This includes so called ‘mortgage prisoners’.

To reduce the barriers these consumers face now or could face in future, we are proposing to amend our responsible lending rules and guidance so that mortgage lenders can choose to undertake a modified affordability assessment where the consumer:

  • has a current mortgage
  • is up-to-date with their mortgage payments
  • does not want to borrow more, other than to finance any relevant product fee or arrangement fee for that mortgage
  • is looking to switch to a new mortgage deal on their current property

Under the modified assessment, mortgage lenders must not enter into a new regulated mortgage contract with an eligible consumer unless they can demonstrate that the new mortgage is more affordable than their present one.

We are also proposing that:

  • Inactive lenders and administrators acting for unregulated entities will be required to review their customer books to identify eligible consumers and write to them highlighting this rule change and directing them to relevant sources of information.
  • Mortgage lenders which make use of the modified affordability assessment will be required to disclose to consumers the basis on which their affordability has been assessed and provide some additional disclosures about potential risks.
  • Mortgage lenders will be required to flag which mortgages have been sold using the modified affordability assessment when submitting Product Sales Data (PSD) reports to the FCA.

Who this applies to

This consultation will be directly relevant to:

  • mortgage lenders
  • mortgage administrators
  • mortgage intermediaries
  • unauthorised entities that own mortgage books
  • mortgage customers

This consultation will also be relevant to stakeholders with an interest in the mortgage market, including:

  • trade bodies representing mortgage firms
  • charities and other organisations
  • consumer organisations

What you need to do

We want to hear your feedback on our proposals. Please send us your comments by 26 June 2019.

Online response form

You can also:

  • email your responses to [email protected]
  • write to Laura Rodrigues, Financial Conduct Authority, 12 Endeavour Square, London E20 1JN

Next steps

We will consider all the feedback and intend to publish rules in a Policy Statement in late 2019.