On 6 June, there was a debate on mortgage prisoners and vulture funds.
In 2016, the Government sold off £13 billion worth of Northern Rock mortgages to Landmark mortgages, owned by the US equity company Cerberus.
According to a BBC Panorama programme, the US firm misled Ministers and officials on mortgages. Our Government believed an undertaking that these people would have access to mortgages and competitive rates of interest
Inactive lenders, such as Cerberus and even the Government firm UKAR, are not authorised to offer new mortgage products to their customers who are stuck with high interest rates.
There are 150,000 people in the UK currently trapped in this predicament, on standard variable rates at 5%, whilst their friends and neighbours can access a market where interest rates are much lower.
Rushanara Ali MP called on the Government to ensure that the Financial Conduct Authority takes meaningful action to protect the 150,000 mortgage prisoners currently trapped in high rates.
Rushanara Ali MP said: “The plight of mortgage prisoners represents a failure of governance and regulation, which is why I have been campaigning for a fair deal for the last 18 months. The Treasury should not have sold the publicly owned loan books off to private vulture funds like Cerberus without sufficient protections in place.
I commend the FCA’s proposals to move the affordability assessment from an absolute test to a relative test. But the proposals do not go far enough.
The FCA should make it obligatory to apply the modified accessibility tests where necessary. As well as providing clear guidance to customers who are seeking to switch, the government and the regulator must incentivise and inform lenders to better support their customers.
I hope that the FCA acts quickly and do not use this consultation as an excuse to prolong their inaction. People are desperate for help right now, and we must act now.”