MorganAsh comments on BoE MPC decision
Following the Bank of England’s announcement to raise interest rates from 4.25% to 4.5%, we have a comment from MorganAsh.
MorganAsh has developed the MorganAsh Resilience System (MARS) to help brokers, advisers and financial services firms better manage and evaluate consumer vulnerability and comply with Consumer Duty.
Andrew Gething, managing director of MorganAsh said: “Although the UK economy is showing its fair share of positive indicators, the stubborn nature of inflation is clearly still too much of a worry for the Bank of England to halt its rate-rising agenda. While many forecasters suggest that we could be getting close to the peak, today’s news demonstrates that a future pause certainly isn’t guaranteed in the current environment.
“While those with fixed-rate mortgages are shielded from this outcome, it will once again be those with either tracker or variable-rate mortgages that take the biggest hit. This may be just a proportion of the market at – around one-and-a-half million households – but we mustn’t forget all those due to come off low fixed-rate products. That’s especially true for those who are now sat on high SVRs, thanks to chain breaks or a prolonged remortgage process.
“With less than 90 days to go until the start of Consumer Duty, identifying and monitoring those vulnerable customers should already be high on the agenda for firms. In truth, financial stresses will form just one part of a much wider scope of vulnerability that firms will be expected to consider. If it’s not already, this will become a fundamental part of the process for firms across financial services, especially as rate rises and other health and lifestyle issues push more borrowers into a vulnerable position.
“In its latest statement released on Wednesday, the FCA confirmed that it will have a sharp focus on both harms and outcomes. Consumers unable to move mortgages may well be one of these cohorts.”
Published: 11 May 2023