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|FCA’s ‘welcome reminder’ on future interest rate changes|
|Thursday, 08 September 2016|
The Financial Conduct Authority (FCA) has today published the key findings of its ‘Financially Vulnerable Customers’ thematic review, which examined the strategies mortgage lenders have in place to mitigate the impact of future interest rate rises on financially vulnerable customers.
The review began in early 2016, at a time when an interest rate rise was widely antiicipated. While interest rates have since been cut in the wake of the EU referendum result, the FCA said that it has “decided to share the results of our review to assist firms and customers to prepare for when interest rates do rise”.
In its findings, the FCA concluded that “most firms have acted followed publication of our previous thematic report and our Occasional Paper No 8: Consumer Vulnerability”, but that firms are at “different stages in developing strategies to mitigate the impact of an interest rate rise on financially vulnerable customers”, with “more work … needed before these strategies will be ready to implement”.
Jane Tully, director of external affairs at the Money Advice Trust, the charity that runs National Debtline, said: “It is encouraging that the FCA has found that mortgage lenders are responding well to its previous work on vulnerability.
“At the same time the regulator is right to highlight that different firms are at different stages in their specific work around interest rate rises and the impact that these would have. This is perhaps understandable in an economic context that has changed significantly, with interest rates having been cut in the meantime.
“However, we are pleased that the FCA has published this work as a welcome reminder that interest rates will still rise at some point in the future, and that financially vulnerable borrowers will need help with the transition away from the currently low-rate environment.
“Despite the base rate cut, firms should continue their preparations to be ready to support customers who are vulnerable to the impact that future interest rate rises could have.
“The Money Advice Trust has previously worked with the Building Societies Association to support its members in preparing customers for interest rate rises, and we look forward to working with lenders of all kinds to be ready for this in the years ahead.”
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