FCA to examine deal changes

The regulator confirmed that it plans to look at whether borrowers’ reasonable expectations are being met when changes are made to mortgages or if lenders are potentially using the changes to increase their profits.

To establish the impact of such changes the FCA has launched a discussion paper and will seek to canvass the views of both the general market and consumers.

Linda Woodall, director of mortgages and consumer lending at the FCA, said: “Given the importance of this topic to both the mortgage industry and consumers, we want to have an open discussion about the fairness of changes to mortgage contracts.

“This will also give us a chance to be more transparent about our approach to assessing fairness.”

But Woodall stressed that there were no immediate plans to change the rules governing such changes.

She said: “We have no plans for new rules, nor changes to existing ones; instead we seek your views on how we currently, and how we could in future, approach fairness in the context of changes to mortgage contracts.

“Across financial services, we recognise there is the wider challenge of complexity of terms and conditions, which mean that some consumers may fail to understand the full implications of what they are signing.

“Responses to this paper will also inform the FCA’s broader work to understand consumer expectations, and how the industry can bridge this gap by better meeting the information needs of consumers.”

Earlier this year Bank of Ireland increased its Base Rate Tracker mortgages for 13,500 UK mortgage customers citing a specific clause in their contracts that allowed an increase after the guarantee period had ended.