A list of recommendations aimed at helping borrowers get a better deal on their mortgage have been unveiled today by the financial regulator.
According to the Financial Conduct Authority (FCA), 30% of people fail to find the best mortgage product for them – a figure it described as a ‘significant minority’ of consumers.
Now it said it wants to address this, whilst also finding ways for so-called ‘mortgage prisoners’ who are trapped on their lenders’ default rate to switch to better products.
The regulator also said it wants to improve the industry by removing “barriers to innovation”, some of which it imposed itself.
In its report it raised concerns many consumers found it difficult to shop around because they could not be sure at the early stages of the process for which mortgage they qualified.
In a bid to address this failing, it has recommended measures to be put in place to make it easier for potential borrowers to weigh up products.
And wants to further enhance the comparison process by finding ways for people to assess the strengths and weaknesses of brokers.
Christopher Woolard, executive director of strategy and competition at the FCA, said there had been significant changes to the market since the financial crisis in order to ensure it did not return to the ‘poor practices of the past’.
He added: “For many the market is working well with high levels of consumer engagement.
“However, we believe that things could work better with more innovative tools to help consumers.”
The FCA was concerned that many borrowers had become stuck on their lenders’ standard variable rate. This happens when customers reach the end of a deal, such as a five-year fixed rate, do not switch to another product and so revert to the lender’s default rate, which is usually more expensive.
Woolard added: “There are also a number of long-standing borrowers that have kept up-to-date with their mortgage repayments but are unable to get a new mortgage deal. We want to explore ways that we, the industry, can help them.”
Following the publication of today’s report, the FCA will now be consulting on its findings. It is due to publish a final report at the end of the year.
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