Please Note: This Article is 7 years old. This increases the likelihood that some or all of it's content is now outdated.

Consumer watchdog the Financial Conduct Authority is to step in and quiz buy to let lenders about decisions to increase the cost of their tracker rate mortgages.

The move follows controversial decision by the Bank of Ireland and West Bromwich Building Society to increase rates for landlords.

Around 20,000 borrowers are affected by the move by both lenders to up their interest rates by citing small print clauses in mortgage contracts.

Concerns are mounting that other buy to let lenders will rely on ‘get out’ clauses in their contracts to make tracker borrowers pay more.

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The FCA’s mortgage and consumer lending director Linda Woodall announced the plan in a key note speech to financial advisers and mortgage lenders at the Financial Services Expo event in London.

She explained two lenders increasing interest rates did not set a precedent for the rest of the industry.

“We recognise that there is an issue to be debated in the industry about customers’ expectations and changing of terms and conditions, even if correct,” she said.

“What we will be doing during the course of the autumn will be releasing a discussion paper to debate this with the industry.”

She suggested that rather than lenders taking unilateral decisions to increase tracker rates, the FCA would examine if upping the rates was fair to borrowers who had made financial plans based on the original mortgage offers.

Woodall also told the industry audience that the FCA was concerned unregulated mortgage packagers were giving advice to borrowers.

“It may start with asking consumers questions to clarify something but it doesn’t take too long before you get into the advice process,” she said. “At the end of the day that is regulated and it should be the adviser providing advice.”

Another issue she indicated the FCA was concerned about was ‘hybrid’ lifetime mortgages marketed at interest-only borrowers who might have to borrow well into their retirement.

The delegates were told only advisers with the relevant qualifications should give advice on lifetime mortgages.

Please Note: This Article is 7 years old. This increases the likelihood that some or all of it's content is now outdated.
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