Asked by: Jonathan Reynolds (Labour (Co-op) - Stalybridge and Hyde)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what steps the Government has taken to improve access to the mortgage market for underserved groups.
Answered by John Glen - Paymaster General and Minister for the Cabinet Office
The Government is committed to maintaining an accessible mortgage market. The Financial Conduct Authority (FCA), which is responsible for regulating the market and protecting consumers, found in their Mortgage Market Study, published March 2019, that the market is working well and that consumers have access to mortgages that are suitable and affordable.
The FCA recognises that lenders should have flexibility to decide what type of evidence of income they can accept from customers, including those who are self-employed or have alternative sources of income.
Many lenders also offer custom mortgage products designed for contractors or the self-employed. These commonly include features designed to account for income volatility, such as the ability to make capital repayments at any time, or income assessments using averaged figures to smooth out monthly variations.
Beyond the FCA’s regulations, decisions around the type and availability of mortgage products are commercial decisions for lenders, and the Government does not seek to intervene in these decisions.
Asked by: Jonathan Reynolds (Labour (Co-op) - Stalybridge and Hyde)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what steps the Government is taking to improve access to the mortgage market for (a) small business owners, (b) self-employed people and (c) people working in the gig economy.
Answered by John Glen - Paymaster General and Minister for the Cabinet Office
The Government is committed to maintaining an accessible mortgage market. The Financial Conduct Authority (FCA), which is responsible for regulating the market and protecting consumers, found in their Mortgage Market Study, published March 2019, that the market is working well and that consumers have access to mortgages that are suitable and affordable.
The FCA recognises that lenders should have flexibility to decide what type of evidence of income they can accept from customers, including those who are self-employed or have alternative sources of income.
Many lenders also offer custom mortgage products designed for contractors or the self-employed. These commonly include features designed to account for income volatility, such as the ability to make capital repayments at any time, or income assessments using averaged figures to smooth out monthly variations.
Beyond the FCA’s regulations, decisions around the type and availability of mortgage products are commercial decisions for lenders, and the Government does not seek to intervene in these decisions.
Asked by: Jonathan Reynolds (Labour (Co-op) - Stalybridge and Hyde)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what steps the Government is taking to encourage greater switching and transparency in the UK mortgage market.
Answered by John Glen - Paymaster General and Minister for the Cabinet Office
The FCA’s final report of the Mortgage Market Study found that there are high levels of consumer engagement, with over three quarters of consumers switching to a new mortgage deal within 6 months of moving onto a reversion rate.
The Government has worked closely with the FCA to consider how to remove the regulatory barriers that prevent some customers, particularly those with inactive lenders, from accessing better deals. The Government welcomes the FCA’s plans to move the affordability assessment from an absolute test to a relative one. This change removes the regulatory barrier that prevented some customers, who otherwise may have been able to switch, from accessing new mortgage products. The Government also welcomes the industry voluntary agreement covering 95% of the UK mortgage market to help ‘trapped’ customers of active lenders.
Transparency and fairness in the mortgage market is a priority for the Government. The Treasury welcomes and supports the work the FCA are doing to improve this as a result of their findings in the final report of the Mortgage Market Study. The Government will continue to monitor the market and support the FCA when necessary.
Asked by: Jonathan Reynolds (Labour (Co-op) - Stalybridge and Hyde)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what steps the Government is taking to (a) minimise the effect of IT outages on consumers’ ability to pay for goods and services and (b) ensure that digital payment systems are more reliable.
Answered by John Glen - Paymaster General and Minister for the Cabinet Office
We take the operational resilience of the finance sector and any detrimental impacts on consumers very seriously. HM Treasury works closely with the Bank of England, the Prudential Regulation Authority (PRA) and the Financial Conduct Authority (FCA) (collectively the ‘Financial Authorities’) to assess, test and improve the operational resilience of the sector and to respond to any major disruption, including to payment systems.
In July 2018, the PRA and the FCA published a joint Discussion Paper on an approach to improve the operational resilience of firms and financial market infrastructures, including to payment systems. The Authorities will use responses to this to inform supervisory activity and future policy-making to support firms’ and FMIs’ operational resilience[i].
The Financial Authorities also have a single mechanism, the Authorities’ Response Framework, to coordinate a response to incidents affecting the finance sector. The Financial Authorities regularly exercise incident response frameworks with the sector to assess their effectiveness and identify improvements. The Bank of England held a sector resilience exercise (SIMEX18) in November 2018 which tested the joint response by public authorities and industry to a simulated disruption.
Asked by: Jonathan Reynolds (Labour (Co-op) - Stalybridge and Hyde)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, when his Department plans to publish the findings from its call for evidence on cash and digital payments; and what steps he is taking to progress that work.
Answered by John Glen - Paymaster General and Minister for the Cabinet Office
Following a programme of currency modernisation we initiated a discussion on payment methods last year, through our Call for Evidence on Cash and Digital Payments in the New Economy. This was launched at Spring Statement 2018. This sought to gather evidence on how changing preferences for cash and digital payments impact on different sectors, regions and demographics. Furthermore, it demonstrated the Government’s intent to explore how cash can remain accessible.
The Government intends to publish a response to this Call for Evidence in due course.