For my second blog, I am looking back over my speeches at the Association of Mortgage Intermediaries Annual Dinners. I gave these during my tenure as chairman. Many of the statements placed focus on the issue of the Mortgage Prisoners. All of the quotes below are direct extracts from speeches I made to audiences of 200-300 industry leaders. The delegates included lenders and regulators. As you will see, in the immediate aftermath of MMR (Money market rate) implementation, I covered the issue of Mortgage Prisoners. In particular, the fact that lenders were not implementing MMR Transitional Provisions in the same way as regulatory intent.

For context, this starting point was also preceded by a successful two-year battle to limit the damage done to existing borrowers by MMR. It also considered the effect of lobbying for Transitional Provisions. As with the first Consultation Papers outlining FCA thinking, this fundamental issue wasn’t even covered. 2014 – “To champion the fact, FCA’s MMR transitional provisions should be applied in the best interests of consumers. In this area, policy intent should not be forgotten or diluted. These Provisions were introduced with the sole intent of helping to minimise the issues around mortgage prisoners. Early examples show us that there is still a significant room for improvement in this critical area.” The following year I touched on it again. I was also actively engaged in raising this issue robustly with lenders and regulators.

2015 –

“Lenders use affordability and stress testing sensibly and engage the FCA’s transitional arrangements and Rules as intended AND in the best interests of consumers.”

You will see that by 2016, my frustration at the lack of progress made was increasing, and so I was particularly hard-hitting on this issue:

2016 –

“In recent months the valid concerns that MMR had left some segments of the market underserved have been tackled. We have seen lenders introducing a more sensible policy in the areas of interest only, and lending into retirement. While these advances are most welcome, we remain concerned about the plight of mortgage prisoners. I want to stress that we have no intention of being scattergun in our approach, nor are we employing lender bashing tactics when it comes to this topic. I know that many of you share our frustrations and concerns in this area.

Throughout the life of the MMR, MCD, and Mortgage Market Competition Review, one thing has remained consistent. Through no fault of their own, consumers have found themselves stripped of their ability to switch lenders for a better deal. This removal of freedom and choice cannot be right. I am glad to see consumer groups, market commentators and politicians showing increasing concern around this issue. It is an area where the regulator still has plenty of opportunities to stand up for consumers. I firmly believe this.

I have given much thought as to how one might argue for removing a borrower’s ability to vote with their feet. No matter who I have asked and no matter how much I have reflected – I am yet to hear a convincing case where this is a good thing from a borrower’s perspective. Despite this, it is where we find ourselves still.

Transitionals are ignored for new customers, but used widely for existing ones – why is this – is this just about ease of administration? The questions posed around this topic are fair and reasonable. As a result of FCA’s two recent papers that appeared to gloss over this most important of consumer issues, we have seen them spike again recently. Can we honestly say that our industry is serving these customers well? I don’t think so. My plea remains – that we all engage together to try and get this fixed while the sun is shining. It will be too late when the storm clouds of rising interest rates hit.”

The following year 2017, I once again covered this issue:

2017 –

“Many concerns have been raised since MMR about unintended consequences causing some segments of the market to be underserved. An alarmingly prevalent view that so-called mortgage prisoners should never have been granted a mortgage in the first place has emerged. This opinion does the potentially vulnerable group a vast disservice. It’s time everyone agreed that rightly, or wrongly these people have mortgages. We can’t merely undo that, or imagine it away. The focus should be on how the industry treats these customers. Mortgage prisoners are not second class citizens or back book cash cows. We need to focus on how the resulting barriers that regulation never intended can be dismantled – freeing these customers to shop around again.

This issue of pre and post-regulation treatment of customers has also struck in the form of PRA Rules affecting Buy to Let Lending. Here again, we saw transitional provisions introduced to try and help existing mortgage holders, yet with the odd notable exception like Santander, lenders have chosen not to utilise them for new customers. The AMI Board mirrors my strong views on this matter. We will continue to oppose the implementation of rules that strip genuine paying consumers of their ability to switch for a better deal. Our views are shared by our members, consumer groups, market commentators and many politicians, though it would be so much better if FCA started to provide some much-needed leadership on this too, and recent FOS adjudications highlight the need for this quite clearly. We believe that the challenges we have posed around these topics are fair and reasonable. We will continue to press on them as we place our customer’s interests at the head of the queue.”

So, in conclusion, throughout my five years as AMI Chairman, the issue of Mortgage Prisoners was at the forefront. We actively lobbied lenders, and regulators firmly reminded that lender implementation of MMR was diametrically opposed to FCA’s Policy intent when it came to transitional provisions and the issue of mortgage prisoners.

As I reflect on this, it is evident that this has been a very long battle. Equally, it is clear to me how disgraceful it is, that after so many years of warnings, the FCA has still actually done nothing. As the regulator tasked with protecting consumers interests, you should expect more and their unwillingness to tackle this very real issue is staggering. So we are now in 2019, and this matter is still unresolved – so some 5 years on my plea to FCA is – it is not too late! Yes, getting directly involved and forcing lenders to act might highlight the embarrassment of your previous hand sitting, but it’s never too late to do the right thing. Equally, difficult as it is – it is better to go there voluntarily, rather than resist and then be forced publicly into that U-turn by others later on.