The City watchdog said lenders need to “step up” to support their customers today as they are battered by soaring mortgage rates and rising prices this year.
Speaking at a Treasury Select Committee hearing, Richard Lloyd, the interim chairman of the Financial Conduct Authority, said he was “worried” at the state of the market and the regulator was ready to force banks into providing better protection to borrowers and mortgage holders.
“This is extremely stressful for individuals, for their mental health and finances in a way that people haven’t experienced in the housing market for some time,” he said.
“Therefore we really need lenders to step up.”
Lloyd added that the regulator was “ready to do more” and was currently “making very clear to lenders the kind of standards that we expect.”
His comments come amid a volley of warning shots from the regulator as it looks to ramp up protection of borrowers as the cost of borrowing soars.
The FCA said last week it had told 32 firms to “improve the way they treat customers” and seven firms had voluntarily agreed to pay £12m in compensation to nearly 60,000 “struggling borrowers”.
A further 40 firms would be under close review in the coming months, the watchdog said.
Lloyd added that the regulator expected certain standards of lenders when people fall into financial strife, as well as effective communications and tailored support.
FCA mounts another defence of call-in powers
Lloyd’s comments came as the regulator mounted another defence of its independence in the face of proposed ‘call-in’ powers by ministers.
The government has tabled a controversial amendment to the financial services and markets bill to allow it to “make, amend or revoke” rules it deems to be in the “significant public interest”.
Lloyd claimed that the move to allow ministers to overrule regulators could damage the UK’s standing as a financial hub internationally.
“I would simply say this – that our international reputation and indeed our competitiveness in financial services internationally, is in part built very clearly on the perception and the reality of the independence of regulators,” he said.
It comes as the latest barb between Ministers and regulators over the plans, after Prudential Regulation Authority chief Sam Woods said the independence of regulators may be undermined and susceptible to blow with the “political wind”.