Financial experts are beginning to suggest that standard variable rate mortgages may take over from PPI after the claims deadline of August 29th.
Risk and compliance expert Matthew Drage has examined the sector and allegations of mis-selling standard variable rate (SVR) mortgages since the financial crisis of 2008.
The suggestion is that lenders pushed sales of SVR loans in an attempt to grow revenue streams in a low interest environment where mortgages were regularly extended.
Now some experts believe borrowers could have overpaid tens of thousands of pounds on their mortgages and be eligible for mis-selling compensation.
Mr Drage said that as time progressed the Financial Conduct Authority (FCA) suggested that firms should build flexibility into their mortgages. Lenders said commercial price rises would ensure sustainability of the market.
But the FCA said that would only be fair if consumers had been able to reasonably anticipate the changes when they took out their loans.
In 2018 Citizens Advice launched a super complaint over the treatment of long term customers after they found 1.2 million people were paying a mortgage penalty of £439 a year just because they were on an SVR mortgage.
Part of the complaint examined whether lenders should have actively pursued a policy which ensured their clients were on the best value rate available instead of leaving them on SVR deals.
In January the FCA announced its intention to remove affordability barriers which currently prevent the prisoners from re-mortgaging.
Chief executive Andrew Bailey said: “We want to remove potential barriers in our rules to these customers switching to a cheaper mortgage.
“To help them we will consult on the changes to our responsible lending rules, with the aim to deliver a more proportionate affordability assessment.
Absolute to relative
“We intend to move the assessment from an absolute test to a relative test, thus the test would be whether the new mortgage costs are more affordable than the current mortgage costs.
“Our focus will be on those customers who are seeking to move to a cheaper mortgage and are not borrowing more.”