The FCA may force lenders to tell their customers how much they could save on their mortgage by switching internally.
As revealed in mortgage switching research released yesterday, the regulator said this would be “the most effective solution” and could be brought up by harnessing “consumer touchpoints”, for example when consumers call or go into their branch.
If utilising “consumer touchpoints” isn’t possible, a combination of emails, letters and phone calls would be most effective, the regulator added.
However the FCA admitted lenders may lack an incentive to do this.
The regulator found that consumers tend not to switch due to a lack of time, a fear of the application process and relative contentment with their current lender or deal.
The regulator will issue a consultation paper on potential measures in the second quarter, before publishing final rules by the end of the year.
The FCA found that customers could become better engaged if they were given the right information at the right time.
Inactive consumers tend to be older, as the consumer research found that 23% of the ‘non-switchers’ are 55-64 years old.
Paul McGerrigan, managing director of Loan.co.uk said “The FCA’s report is encouraging. Most consumers with mortgages are clearly switched-on when it comes to their finances.
“What is alarming, however, is a significant number of consumers could be missing out on a product that is better tailored to their circumstances because they want to avoid the hassle of switching providers.
“Even when introductory rates end and consumers face a higher reversion rate, many accept higher payments rather than investigating a better deal.”
