"The Bill makes the case for a new covenant that will deliver a fairer deal for consumers and small businesses."
The Bill, entitled Banking (Consumer and Small Business Protection), will make provisions to prevent the foreclosure of loans under certain circumstances – including when the borrower has never missed a repayment – to prevent the unnecessary insolvencies of businesses in the UK.
It will also legislate for the introduction of a Financial Services Tribunal to fill the gap in accessing justice for businesses with a dispute resolution mechanism that has the investigatory powers required to resolve complex business banking disputes.
Additionally, the Bill will make provisions to enable consumers to transfer mortgages between providers and to prohibit the sale of mortgage debt to unregulated entities.
Charlie Elphicke MP, Member of Parliament for Dover, said: “The Bill makes the case for a new covenant that will deliver a fairer deal for consumers and small businesses. The focus will be on making provisions to free mortgage prisoners across the UK, but it will also make the case for a new Financial Services Tribunal that will ensure small business borrowers can access justice and a fair hearing if they have a dispute with their lender. The Treasury needs to take responsibility. They have been selling Northern Rock’s loan book to vulture funds and should be lending a helping hand, rather than a Tin Ear.”
In a statement, the All-Party Parliamentary Group on Fair Business Banking, said: "The FCA are consulting on proposals to help mortgage prisoners switch providers, but these proposals only give lenders the option to apply a modified assessment and would not be introduced as an obligation on lenders. UK Finance launched a voluntary agreement to support mortgage prisoners to switch to an alternative product at their present lender, but this does not help the approximately 120,000 customers with inactive lenders who have no hope of improving their situation, even though they are in the situation through no fault of their own.
"The FCA and the Treasury must do more. This Bill seeks to legislate so that these borrowers should be treated as grandfathered as regards the later regulatory rues that came in. Banks should be obliged to take people on and treat them as grandfathered – and the new mortgages should be permitted without regulatory penalty for the bank they move to. The practice of selling mortgage books to lenders who are unregulated and/or do not offer new business should be stopped."
