Last year the FCA introduced new rules that would allow lenders the flexibility to help some mortgage prisoners. Evidence we have seen thus far indicates that TSB and the Co-Op are the only lenders that have been actively offering better rates to its current customers.
The process by which some former Northern Rock and Bradford and Bingley customers ended up with active, high street lenders–such as TSB and the Co-Op –and those that ended up with vulture funds–who serve as no more than debt collectors–was arbitrary. And here we must be clear: the term ‘inactive lender’–commonly used to describe vulture funds–is a misnomer. They are nothing more than debt collectors with the sole objective of maximum return for their shareholders regardless of the social consequences of their actions.
The only possible option for customers stuck with vulture funds is to refinance back into mainstream banking. This is what the FCA guidelines introduced last year were intended to facilitate. However, it appears only a few building societies have tried to address these issues. There has been a deafening silence from the rest of industry.
Kevin Hollinrake MP says: “It is deeply cynical to laud your Corporate Social Responsibility policies and then refuse to implement guidance from the regulator. It appears that some banks seem determined to evade their clear responsibilities to be good citizens. We call on the Government to intervene to force banks to do the right thing and to prevent any bank from selling off their loan books in future to unregulated vulture funds.”
The FCA has taken this as far as they can and it is clear that the government must now step in and ensure that these citizens of our country are treated fairly. Please find the original press release statement from UK Finance here and find FCA published data on mortgage prisoners here.