You are here: Home - Mortgages - Remortgage - News -

Inactive borrowers should be contacted one year after being on SVR

0
Written by: Owain Thomas
15/05/2018
The Financial Conduct Authority (FCA) is proposing that inactive borrowers who have been on a lender’s reversion rate for a year should be contacted about the options of switching to a different product.

The regulator said it wanted to make it easier for less active consumers who have been on a reversion rate, such as a Standard Variable Rate (SVR), for an extended period of time to switch products with their existing lender, if it was in their interests to do so.

However, it recognised that in some cases there may not be a suitable replacement product available from the current lender.

In its report, the FCA noted that one way to solve the problem of inactive borrowers might be to ask lenders to contact affected customers a year or so after moving onto a reversion rate “giving them a simple and straightforward means of moving to a cheaper mortgage”.

However, a remedy of this kind would need to take into account pre-contractual disclosure requirements, in particular those mandated by the Mortgage Credit Directive, as well as other relevant rules.

“We would also need to consider whether any communication encouraging customers to switch should contain additional information about the risks and benefits of doing so,” the FCA continued.

“We welcome ideas from lenders, intermediaries and consumer groups about proportionate and effective ways of engaging with these consumers.

It added: “What would be an effective alternative where no suitable product is offered by the customer’s existing lender?” and asked if respondents had any views on how affected consumers could be offered a better deal.

Improving strategies

The FCA acknowledged that lenders’ retention strategies and intermediaries’ contact strategies were developing as more lenders were paying retention procuration fees, which itself might lead to more existing borrowers being encouraged to switch.

It also suggested brokers could play a key role in innovation to engage consumers throughout the mortgage lifecycle and give them early sight of which products they qualify for.

“For example, a lender (or, perhaps longer term, an intermediary) with access to a customer’s mortgage account could better understand the extent of any overpayments and eligibility for a new deal, enabling them to tailor the timing and content of that customer contact,” the regulator said.

“Indeed, playing data back to consumers on a regular basis might be an effective means of educating consumers on amortisation, the features of their mortgage, and the points at which they might consider switching.”

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

Are you a first-time buyer looking for a mortgage?

Look no further, get the help you need by searching for your perfect mortgage

Five ways to get on the property ladder without the Bank of Mum and Dad

A report suggests the Bank of Mum and Dad is running low on funds. Fortunately, there are other options for st...

The essential Your Money guide to the April 2018 tax changes

As we head into the 2018/19 tax year, a number of key changes take place to existing policies while some new i...

A guide to switching energy provider

All you need to know about switching from one energy supplier to another.

What will happen if rates change

How your finances will be impacted by a rise in interest rates.

Regular Savings Calculator

Small regular contributions can build up nicely over time.

Online Savings Calculator

Work out how your online savings can build over time.

Having a baby and your finances: seven top tips

We’re guessing the Duchess of Cambridge won’t be fretting about maternity pay or whether she’ll still be...

Protecting family wealth: 10 tips for cutting inheritance tax

Inheritance tax - sometimes known as 'death tax' - can cause even more heartache for bereaved families. But th...

Travel insurance: Five tips to ensure a successful claim

Ahead of your summer holiday, it’s important to make sure you have the right level of travel cover or you co...

YourMoney.com Awards 2018

Now in their 21st year, our awards recognise the companies offering the best products and services to consumers

Money Tips of the Week

Read previous post:
home insurance
Remortgage delay costs UK homeowners £53m

A third of UK homeowners slipped onto their lender’s standard variable rate for an average of six weeks in 2017,...

Close