FCA debates fairness of mortgage contracts

FCA debates fairness of mortgage contracts




The Financial Conduct Authority (FCA) has published a discussion paper today, asking consumer and firms for their views on fairness of mortgage contract changes….

The Financial Conduct Authority (FCA) has published a discussion paper today, asking consumer and firms for their views on fairness of mortgage contract changes.


A debate has been started by the FCA, posing the question as to how fairness should be assessed when lenders make changes to the terms of mortgage contracts and whether the FCA needs to make changes to its rules or guidance.

The FCA has set out factors in a discussion paper which sets out some of the factors that are considered relevant when assessing changes to mortgages contracts and has asked firms to get involved with their views on its current approach to fairness. 

Commenting on the debate, Clive Adamson, Director of Supervision at the FCA, said: “Consumers have a right to be treated fairly if their lender changes a term of their mortgage contract. It isn't always clear though to consumers how lenders and the FCA assess fairness in this area. This paper gives an opportunity for firms and consumers to give their views on what fairness means when changes are made in the terms of this very important financial product.”

As well as inviting discussion about the operation of the current regulatory framework, the FCA has also outlined three options for potential further action.  These include:

Taking no further action with the discussion paper and subsequent feedback statement providing clarity and transparency about the FCA approach to fairness;    

Providing further guidance on current rules but making no changes to the current regulatory framework; 

Introducing new rules for example around the information that firms must provide to a consumer or restricting the changes that a lender could apply to mortgage contracts
 
The FCA has stated it is keen to engage with both the mortgage industry and consumers during the discussion period, where interested parties can send their views directly to the FCA.  
 

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