Question to the HM Treasury:

To ask the Chancellor of the Exchequer, what steps his Department is taking to (a) ensure vulture funds treat customers fairly; and (b) prevent the creation of mortgage prisoners through the sale of loan books to unregulated entities.

The FCA have advised that borrowers with inactive lenders, such as UK Asset Resolution (UKAR), are no less protected, when the legal title holder is regulated, than those with active lenders. The Government is also open to extending the Financial Conduct Authority’s (FCA) regulatory perimeter, but is yet to see evidence to suggest that there are borrowers that are currently being harmed by the current regulatory regime and that would therefore be helped by extending the FCA’s remit.

All sales of UKAR loans have included robust, non-negotiable protections to ensure the continued fair treatment of customers. These have included: adherence to the FCA’s Treating Customers Fairly (TCF) principles; its Mortgages and Home Finance: Conduct of Business (MCOB) rules; recourse to the Financial Ombudsman Service (FOS); and restrictions to the changes the buyer can make to standard variable rates (SVRs) for at least 12 months after the transfer of ownership. There have also been no changes to the terms and conditions of the loans which have been sold, and sales of UKAR loans have also not negatively impacted the ability of affected customers to re-mortgage elsewhere.

The Government has worked with the FCA to provide switching options for consumers with inactive lenders and will continue to support these customers where they would see genuine benefit from switching.