FCA’s thematic review on the fair treatment of existing interest-only mortgage customers

The FCA has published a thematic review (TR18/1) on the fair treatment of existing interest-only mortgage customers.

The FCA has been examining the fair treatment of customers with interest-only mortgages and has been looking at how lenders are working to help customers avoid the potential harm of non-repayment at maturity.

In summary, the FCA found that:

– all lenders in the sample have made progress in the fair treatment of these customers;
– repayment options recommended in the customer files reviewed were likely to be fair in almost all cases and that the potential harm caused by non-repayment at maturity was reduced;
– all lenders in the sample understand the value, volume and maturity profile of their interest-only mortgage book;
– most lenders provided a wide range of options to help customers who are unable to pay their mortgage at maturity; and
– customers who engaged with their lenders earlier in the term of their mortgage and who did not have a suitable repayment plan had a wide range of affordable repayment options available than those who made contact later.

The FCA will continue to monitor the risks identified. Lenders are encourage to consider the finding of the review to help them build better understanding of why some customers don’t make contact to discuss their interest-only mortgages.