The Financial Conduct Authority (FCA) is facing renewed backlash for its handling of issues affecting ‘mortgage prisoners,’ those trapped in high-cost home loans with little recourse to escape.
The report, by the All Party Parliamentary Group (APPG) in investment fraud and fairer financial services, details firsthand accounts from affected borrowers and paints a grim picture of the regulator’s ineffectiveness, perceived bias, and failure to provide timely solutions.
A WIDESPREAD FAILURE TO RESOLVE CASES
Among the five mortgage prisoners who contributed to the report, none reported a resolution to their cases despite months or years of seeking assistance from the FCA. One respondent, identified as Lisa King, detailed a harrowing ordeal involving her late husband, whose financial stress and subsequent health decline were linked to mortgage arrears. She criticised the FCA’s inability to hold her lender, Lloyds Banking Group, accountable, despite evidence of over £150,000 in improper charges. Her family home remains under threat of repossession.
Other respondents echoed similar frustrations. One individual stated that their mortgage provider, Heliodor, continued to engage in practices for which it had previously been fined by the FCA’s predecessor, the Financial Services Authority (FSA). Despite raising the issue, they claim the FCA sided with the lender and failed to act decisively.
DEVASTATING PERSONAL AND FINANCIAL CONSEQUENCES
The impacts of being a mortgage prisoner extend beyond financial losses. Respondents reported severe emotional and physical tolls. King revealed her husband’s suicide attempt during their struggle with arrears, while another respondent said they had paid £70,000 more than average mortgage holders over the years, depriving their family of basic comforts and financial stability.
“I have had to keep food on the table and pay the bills while battling mental health challenges. Did the stress contribute to me getting prostate cancer? It’s too shocking to think about,” one individual stated.
REGULATOR UNDER FIRE
The report also sheds light on perceptions of the FCA’s culture and effectiveness. Most respondents described their dealings with the regulator as unhelpful, with one labelling it “non-existent” and another describing the FCA as “in the pockets of banks.” Four out of five respondents said they believed the FCA was biased toward financial institutions, citing conflicts of interest due to employees transitioning between the regulator and the firms it oversees.
Additionally, respondents criticised the FCA’s lack of transparency and failure to communicate effectively. Many were unsure how to lodge formal complaints or follow up on unresolved issues. One remarked that the FCA “always gives the answers the lender wants them to give,” further undermining trust in the regulator’s impartiality.
“The FCA needs to transform itself into a tougher regulator. If it is unable to change, then I suggest it ceases to exist”
CALLS FOR CHANGE
Respondents called for sweeping reforms at the FCA, urging it to adopt a tougher stance against regulated firms and to better protect consumers. King argued that the regulator should either transform into a more aggressive watchdog or cease to exist entirely. Another respondent demanded improved communication with complainants and more rigorous enforcement against mortgage providers.
The FCA’s ongoing Transformation Programme was met with skepticism, with some respondents dismissing it as inadequate. “The FCA needs to transform itself into a tougher regulator,” King stated. “If it is unable to change, then I suggest it ceases to exist.”
A SYSTEM IN NEED OF OVERHAUL
The report’s findings reveal an urgent need for the FCA to address the systemic issues plaguing its interactions with mortgage prisoners. With growing calls for greater accountability, transparency, and impartiality, the regulator faces mounting pressure to restore public trust and fulfil its mandate to protect consumers. For the thousands still trapped in financial limbo, meaningful change cannot come soon enough.
