March 10, 2020 / 11:17 AM / a month ago

UK watchdog to help customers switch to better mortgage deals

LONDON (Reuters) - There is a case for intervening in Britain’s mortgage market to help customers switch to better deals, the Financial Conduct Authority said on Tuesday.

“Based on our research, we believe there is a case for intervening to help mortgage customers who do not switch. We will issue a consultation paper on potential remedies later this year,” the FCA said in a statement on its website.

The watchdog said its research looking into why a minority of mortgage holders don’t switch showed that inactive borrowers tend to be older and have slightly lower incomes than those that switch.

They also tend to overestimate the difficulty in switching home loans and underestimating the benefits of doing so, the FCA’s research said.

“In order to provide a clear benefit to switching and overcome contentedness, we feel that an intervention that provides non-switchers with an estimate from their current lender of the amount they could save if they switched internally would be the most effective solution,” the research said.

“In order to address non-switchers’ overestimation of the difficulties of switching, we believe that lenders could provide an estimate of the amount of time it would take to switch internally.”

A broader mortgages market study by the FCA in March last year found that up to 800,000 consumers are missing out on an average of 1,000 pounds a year by not changing deals.

Reporting by Huw Jones; Editing by Chizu Nomiyama

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