CP20/13: Consultation on mortgages: Removing barriers to intra-group switching and helping borrowers with maturing interest-only and part-and-part mortgages

Open consultation: CP20/13
Consultation closes

We are consulting on new rules to help some borrowers in closed mortgage books to have more options. We are also consulting on new guidance to help some borrowers with maturing interest-only and part-and part mortgages who are affected by the conditions created by coronavirus (Covid-19).

Read CP20/13 (PDF)

Why we are consulting

Some ‘closed-book’ mortgage customers may lack switching options. This issue has been exacerbated by the economic conditions created by coronavirus, which have resulted in lenders removing products from the mortgage market, leaving existing borrowers with fewer switching options.

The adverse market conditions could have also made it more difficult for borrowers looking to repay the outstanding capital on their interest-only and part-and-part mortgages.

The proposed rules would make it easier for borrowers in closed mortgage books to switch to a new mortgage deal with a firm in the same group as their current lender or firm.

The proposed guidance would help borrowers who have a maturing interest-only or part-and-part mortgage and who are currently up to date with payments. These borrowers would have the option to delay repayment of the outstanding capital on their mortgage until 31 October 2021.

Some of the consumers who could benefit from these changes could be described as ‘mortgage prisoners’. We define these as being borrowers who are up to date with payments but who are unable to switch to a new mortgage deal and, depending on their loan and borrower risk characteristics, are potentially paying more than they need to.

We have separately also published a Statement on mortgage prisoners. It also covers the interventions that we have put in place to help these borrowers.

Who this applies to

This consultation affects:

  • mortgage lenders
  • mortgage administrators, including those acting on behalf of unregulated entities
  • closed book mortgage customers
  • mortgage customers with maturing interest-only or part-and-part mortgages

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

  • credit reference agencies
  • trade bodies representing mortgage firms
  • consumers and consumer organisations
  • charities and other organisations ​​ 

What you need to do

We are asking for comments on this Consultation Paper (CP) by 8 September 2020.​​​​​

Online response form

You can also:

  • email [email protected] or
  • write to: Mortgage Policy Team, Financial Conduct Authority, 12 Endeavour Square, London, E20 1JN

Next steps

If we proceed, the proposed rule changes on intra-group switching will come into effect immediately after the publication of the Policy Statement. If we proceed with the proposed guidance on maturing interest-only and part-and-part mortgages this will come into effect on 31 October 2020. If you have any comments or feedback on these proposals please send us these by 8 September 2020.

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