FCA starts debate on fairness of changes to mortgage contracts – Financial Conduct Au

[Legal Beagles]

Consumers and firms are to be asked for their views on how fairness should be assessed when lenders make changes to the terms of mortgage contracts and whether the Financial Conduct Authority (FCA) needs to make changes to its rules or guidance. In a discussion paper published today, the FCA sets out some of the […]

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[Amethyst]

Re: FCA starts debate on fairness of changes to mortgage contracts – Financial Conduc

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[Amethyst]

Re: FCA starts debate on fairness of changes to mortgage contracts – Financial Conduc

SPECIFIC SECTION AIMED AT CONSUMERS

(That's you guys !)

Consumer experiences of the mortgage market
Introduction
3.1 This discussion paper aims to consider the factors that may be relevant when assessing the
fairness of a change to a regulated mortgage contract. We are interested in hearing your views,
particularly about your own experiences or expectations of the mortgage market and regulated
mortgage contracts.

3.2 In this chapter we will explain the role of the FCA and introduce our rules and Principles, then
set out some questions about your experiences and expectations of the mortgage market.
This chapter contains all the information you will need as a consumer, so you can consider the
questions without needing to read the rest of the paper.

The role of the FCA
3.3 We regulate most firms and individuals that advise on, sell and arrange financial products and
services in the UK. Our aim is to protect consumers, protect and enhance the integrity of the UK
financial system and promote effective competition between financial services providers. We
have rule-making, investigative and enforcement powers that we use to protect and regulate
the financial services industry. We are fair and principled in our approach to regulation.17 We
do not act for individual consumers or represent people in individual complaints; the Financial
Ombudsman Service (FOS) assists consumers with individual complaints, if they are unable to
resolve a dispute with a firm.18

The FCA’s rules
3.4 The FCA has a number of rules that are intended to protect consumers. We have rules relating
to different sectors within the financial services industry: for example, for mortgages, we have
the Mortgages and Home Finance: Conduct of Business sourcebook (MCOB).19 Some of our
rules come from European Directives.20 We also use our rule-making powers, which we use
to make our own rules that are specific to the UK financial services market. An example is our
Principles for Businesses, a general statement of the fundamental obligations firms have.

The FCA’s Principles for Businesses
3.5 This discussion paper looks at some of the factors that may be relevant when assessing the
fairness of a change to a regulated mortgage contract. Most of these factors are based on the
FCA’s Principles for Businesses – mainly Principles 6 and 7, which relate to the fair treatment of
customers and the provision of fair and clear information.

Principle 6 says that a firm must pay due regard to the interests of its customers and treat them fairly.

Principle 7 says that a firm must communicate information to consumers in a way which is clear, fair and not misleading.





Your experiences and expectations

3.6 We are interested to hear your experiences with regulated mortgage contracts and your views
about what you expect from the mortgage market, including what factors may be relevant
when considering the fairness of a change to a regulated mortgage contract.

Your expectations
3.7 It may be that you don’t have any direct experience of a change to your mortgage contract.
However, you may still have expectations about how you think a mortgage contract should
operate. We are interested in your views about what factors may make a change to a mortgage
contract fair or unfair.

3.8 We have set out some questions below to prompt discussion about what factors may be
relevant. For these questions, assume that the lender has the right under the regulated
mortgage contract to make the change. What we are interested in is your views on the fairness
of the change itself.

3.9 Please feel free to answer as many or as few of the questions as you would like. Where we
ask about your expectations of a product, please explain, if possible, why you expected the
product would perform in a certain way (for example, because of your communications with a
firm, or because of the way that the product was marketed).


Question 1: Your experiences
• Has your mortgage contract been changed at any time?
• What change was made?
• Did you think the change was fair or unfair? Please explain why.
Think about how the firm has treated you, how they communicated the change to you, and if you think they considered your needs or situation.



Question 2: Change to a standard variable rate (SVR)
Imagine you have a mortgage contract where the interest rate is the lender’s standard variable rate (SVR).23 This is a rate set by the lender which can be increased or decreased. The lender should set out the reasons why
the interest rate may be changed in the mortgage contract.

• What do you think are fair reasons for a lender to increase the SVR?
• Is there anything that the lender could do to make sure the increase is fair?

For example, does the lender give you notice of the change; do they clearly set out their intention to increase the SVR; do they set out your options if you do not like the change?



Question 3: Change to a fixed-rate contract before the end of the fixed term
Imagine you have a mortgage contract with an interest rate that is fixed for five years.
• Would you expect the interest rate to be changed before the end of the five-year period? If so, in what circumstances do you think this could be fair?

Question 4: The removal of a feature from a mortgage contract
Imagine there is a term in your mortgage contract allowing you to rent the property out to someone else. There is also a term in the contract allowing the lender to withdraw your right to rent out the property at any time.
• Do you think that it is fair for the lender to be able to withdraw your right
to rent the property out during the term of the contract? Please explain
your reasons.

Question 5: The removal of a feature from a mortgage contract
Imagine you have a mortgage that has a bank current account linked to it. The mortgage agreement allows you to borrow money from the current
account, up to an agreed limit. This loan is repaid as part of your mortgage repayments.

• If you took out a mortgage that had this facility, would you expect that
there may be a term in the contract that allows the lender to withdraw it?

• Do you think that it is fair for the lender to be able to withdraw this
feature? Please explain your reasons.


Question 6: A variation caused by your mortgage provider changing
Imagine that your mortgage is taken over by another provider, perhaps because two mortgage lenders have merged to become one company.

• Would you expect your mortgage terms to remain the same for the duration of your mortgage?

• Do you think it is fair for the new provider, who has taken over your existing lender, to be able to change your contract? Please explain why.

• Do you think that it is fair for the lender to be able to withdraw a feature?
Please explain your reasons.



Next Steps
3.10 We welcome your views on any of the questions we have set out, as it helps us to understand
your experiences and see the sort of issues that you are coming across with changes to your
mortgage contracts.
3.11 Please note, however, that we are unable to assist in relation to any individual disputes with
firms, as explained in paragraph 3.3. Any responses that we gather as a result of this discussion
paper will, however, help us in achieving our statutory aim of protecting consumers in general.
3.12 As well as asking for your written feedback to these questions, we also plan to run some
consumer focus groups so that we can hear from consumers directly about their experiences.
It is likely that we will be engaging a market research company to assist us in carrying out
this exercise.

Other sections of the Discussion Paper
3.13 We welcome your comments on any other part of this discussion paper.

[Crazy council]

Re: FCA starts debate on fairness of changes to mortgage contracts – Financial Conduc

I may send an answer to this.

My morgaee co, offered to vary terms, change contracts, ect, ect, all to help me. A few years ago, i had to fight a false bankruptcy from my council that went all the way, including me being evicted from my house for a period. ( i fought and won, eventualy ).

I always maintain some form of monthly payment thorugh out the period, and because of that, my mortgagee co refused to allow the morgaee to be dealt with by the trustee while i was fighting. My mortgagee co were allowing me to pay as low as £ 100 per month when i was evicted, while i was fighting. and allowed me to pay a lower amount for nearly 4 years

They seem to bend over backwards to help me, as long as i was paying something each month... sorted things out in feb 2013 ( lovely feeling getting the keys to your house back from a trustee after 2 years ).

I wont name my mortgage co, because they one of the big ones that lots of people seem to have problems with.... but i wrote this as i really feel that they helped me substantially,

[Amethyst]

Re: FCA starts debate on fairness of changes to mortgage contracts – Financial Conduc

It's lovely to hear good stories about mortgage companies, and the FCA want all opinions and experiences, good and bad. If you really feel they acted properly and helped you when you needed it most, then name them, they might see they get positive publiclity from actually bothering to help people and do it more (we can dream lol)

[Crazy council]

Re: FCA starts debate on fairness of changes to mortgage contracts – Financial Conduc

My morgage co is G-mac/Paratus....

If you really feel they acted properly and helped you when you needed it most, then name them, they might see they get positive publicity from actually bothering to help people and do it more

I really do agree 100% with this. 1 proper letter thanking a company for assisting you in times of difficulty does more than 100s of complaints. I do realise that i got an easyer ride due to the fact i had no loans or anything tide against my house and my mortgagee outstanding is less than 25% the value of my house. But they really helped, especialy by keeping the trustee out of the picture. for 4 years