Moved by
Lord Stevenson of Balmacara
99: After Clause 40, insert the following new Clause—
“Standard Variable Rates: cap on charges for mortgage prisoners
In section 137A of the Financial Services and Markets Act 2000 (the FCA’s general rules), at end insert—
“(7) The FCA must make rules by virtue of subsection (1) in relation to introducing a cap on the interest rates charged to mortgage prisoners in relation to regulated mortgage contracts, with a view to securing an appropriate degree of protection for consumers.
(8) In subsection (7) “mortgage prisoner” means a consumer who cannot switch to a different lender because of their characteristics and has a regulated mortgage contract with one of the following type of firms—
(a) inactive lenders, or firms authorised for mortgage lending that are no longer lending; and
(b) unregulated entities, or firms not authorised for mortgage lending.
(9) The rules made by the FCA under subsection (7) must set the level of the cap on the Standard Variable Rate at a level no more than 2 percentage points above the Bank of England base rate.
(10) In subsection (9) “Standard Variable Rate” means the variable rate of interest charged under the regulated mortgage contract after the end of any initial introductory deal.
(11) The FCA must ensure any rules that it is required to make as a result of the amendment made by subsection (7) are made not later than 31 July 2021.””
Member’s explanatory statement
This new Clause would require the FCA to introduce a cap on the Standard Variable Rates charged to consumers who cannot switch to a different lender because of their characteristics and who have a regulated mortgage contract with either an inactive lender or an unregulated entity.