On 6 August 2023, the FCA published a letter from its Chief Executive, Nikhil Rathi, to the Treasury Committee Chair, Harriet Baldwin, regarding aspects of the FCA’s work. The letter provides the FCA’s responses to questions posed by Ms Baldwin in a letter dated 2 August 2023, which followed an evidence session with the Committee.

Key comments made by Mr Rathi in his letter include:

  • Increased interest rates will not of themselves create more trapped borrowers.
  • As of the end of 2022, the number of mortgages in closed books or with an inactive firm had reduced to 175,000 and of this reduction around 9,000 borrowers had remortgaged to an active lender. The FCA does not expect the population of borrowers in closed books who are unable to switch to increase.
  • The mortgage data needed to refresh the FCA’s analysis of the number of mortgages in a closed book or with an inactive firm will be available soon and the FCA will share a revised picture with the Committee once its analysis is complete.
  • The FCA’s affordability rules have been changed and now allow active lenders to offer loans to any borrower up-to-date with their payments without undertaking a standard affordability test, providing the new payments are more affordable.
  • The FCA has recently published a report and research to understand the characteristics of borrowers with interest-only mortgages, and will work with industry and consumer groups to consider what steps the sector can take to support all interest-only borrowers approaching the end of their mortgage term without a credible plan to repay the mortgage.
  • While advising on philanthropy and charitable giving without return is outside the FCA’s regulatory perimeter, the financial adviser community could have a role in supporting greater charitable giving. FCA teams will raise this topic at their next meetings with relevant professional bodies to start exploring the options available, while recognising the scope of the FCA’s statutory remit.