MoneySavingExpert: The Government must help mortgage prisoners now
“Being a mortgage prisoner has been hell to me, you worry about losing your home, you can't plan on starting a family and moving forward with your life. The whole experience affects your mental wellbeing and this has now got to stop.” – MSE user.
- The UK’s biggest consumer website, MoneySavingExpert.com (MSE), has responded to the Financial Conduct Authority’s (FCA’s) consultation on its proposal to help mortgage prisoners – Mortgage Consumers: proposed changes to responsible lending rules and guidance (CP19/14).
- In its response, MSE tells the FCA that its plans to help mortgage prisoners are welcome – but hugely insufficient. The FCA can only help a small fraction of those trapped and these proposals cannot be the final policy response to this problem.
- As part of its response MSE conducted the first large-scale survey of mortgage prisoners, who repeatedly portrayed their situation as “hell” and described the financial and mental hardship caused by being unable to switch to a cheaper deal. Please see below for quotes from the survey.
- The Government must now accept responsibility for finding a solution for those prisoners who won’t be helped by the FCA’s proposed measures.
- The Government must also immediately stop selling mortgages to unregulated firms.
- Martin Lewis and MoneySavingExpert.com have been campaigning for mortgage prisoners for several years. Please see the notes to editors for a timeline of MSE’s work.
MSE’s full response to the FCA’s consultation, including the findings from its latest survey, can be found within its latest campaign blog.
Mortgage prisoners are in despair
Almost 1,000 qualitative responses were left by survey respondents. Here’s a snapshot of some of the experiences shared:
“It makes me depressed – I feel I have let my family down immensely – self-loathing and days of complete darkness… I have been on and off medication for 10 years. Being a mortgage prisoner has taken away so much of my inner being... I am not the person I was – I am beat.”
“Had a nervous breakdown because I couldn't cope and my mum had to look after the children.”
“It is a rock around my neck. I am being strangled by my own government. The FCA and FOS are nothing but a front. The FCA Principle 6 has clearly been breached. It cannot be fair or reasonable to transfer a mortgage to an inactive lender, hike up the SVR and make it impossible for them to find another deal as they would have done under their original mortgage.”
Notes to editors
MSE's mortgage prisoner campaign timeline:
- In 2015 Martin Lewis met key figures in the EU, the Treasury and the FCA, which are the organisations responsible for UK mortgage regulations.
- In 2016, then-Chancellor George Osborne wrote to mortgage lenders following a meeting with Martin about the plight of mortgage prisoners. He confirmed that lenders don’t have to carry out affordability assessments for their existing customers seeking a product transfer.
However, Martin said the Chancellor's letter only addressed "a fraction of the problem".
- In May 2018, the FCA found 150,000 consumers in the UK were mortgage prisoners. MSE contributed to the regulator's discovery by suggesting and helping facilitate a survey of mortgage brokers. The survey backed up the regulator's findings from analysing mortgage data, and the FCA thanked MSE for its contribution.
The regulator said it was able to help 30,000 of the mortgage prisoners it identified – whose lenders the FCA could force to help their 'imprisoned' consumers if needed. But the other 120,000 'prisoners' have had their mortgages bought by firms who aren't authorised to lend, and so the FCA has no power to make them do anything.
- In October 2018, Treasury Minister John Glen MP admitted that mortgage prisoners "need to be dealt with" at an event run by MoneySavingExpert.com at the Conservative Party Conference.
The minister also expressed agreement with Martin's call that an affordability check for someone with an existing mortgage – if it's at a cheaper rate and they're not borrowing more – should be: 'Have you repaid and not defaulted?'.
- In March 2019, the Financial Conduct Authority launched a consultation detailing its solution to free mortgage prisoners.
- In July 2019, MSE submitted its response to the FCA consultation, welcoming it but calling for improvements. Crucially, MSE called on the Government to step in and help those mortgage prisoners beyond the reach of the regulator.