FCA Investigates Mortgage Terms Changes

FCA Investigates Mortgage Terms Changes.

Have the terms of your mortgage changed part way through the term of your mortgage contract? A number of lenders may have done this and possibly not had the right to do so, or indeed did have a right to do so in the small print, but you felt it was unfair. If so, the finance industry regulator, the Financial Conduct Authority (FCA) is on the case.

The FCA has confirmed it is to investigate mortgage lenders that have changed the terms of client’s mortgage mid-term. Examples of this are changes to interest rates, lending criteria or the removing products or features.

One of the main doctrines of the FCA is the authorised firms are required to “treat customers fairly” or TCF as it is known in the finance industry.

The FCA has suggested that it is looking at cases where a mortgage lender actually considered the fairness of changes to consumers when it made any changes. The FCA is also considering whether to bring in rules to ensure lenders consider the needs of clients and the impact of changes before any changes to terms are made.

Comment

A classic example of this was one lender announced significant increases to its tracker mortgage range where clients had secured extremely low mortgage interest rate terms of around 0.5% over base rate, yet the lender then moved to increase its underlying base rate setting to increase the overall mortgage interest rate charged. Was this fair?

That said, it is one rule for the regulator and one rule for the firms it regulates. It has recently been found that the FCA has been overcharging authorised financial services firms such as our own i.e. this website. However, in its wisdom, the FCA looks unlikely to refund financial firms that have been overcharged.