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<p>Customers have always been protected in UKAR asset sales. The government and UKAR
consider the fair treatment of customers a priority for all asset sales and have always
included customer protections in line with or that exceeded industry best practice
for transactions of this nature.</p><p> </p><p>Bidders were required to agree to customer
protections, which were non-negotiable, before the bids were assessed on price. These
protections included: adherence to the Financial Conduct Authority’s principle of
Treating Customers Fairly; where customers were on Standard Variable Rate mortgages,
purchasers were restricted in the changes they could make to the Standard Variable
Rate for 12 months; and, mortgage books that were sold had to be administered by Financial
Conduct Authority regulated companies, and no changes could be made to the terms and
conditions of any of the loans that had been sold.</p><p> </p><p>In addition to requiring
bidders to agree to the protections outlined above, UKAR undertake due diligence on
bidders, their proposed servicers and legal title holders of the loans to ensure that
they have the necessary policies, procedures and governance in place to treat customers
fairly.</p><p> </p><p>The details of all NRAM mortgage sales can be found on gov.uk.
Both active and non-active lenders are invited to participate in UKAR sales to ensure
a competitive process. In relation to the latest asset sale, UKAR’s advisors proactively
invited the top 25 active lenders to participate. Notwithstanding this, UKAR have
not received a bid from an active lender that covered the full portfolio of assets
being sold.</p><p> </p><p>Whether to offer customers new mortgage products is a commercial
decision for lenders and government does not intervene in individual cases.</p><p>
</p><p>That said, the government welcomes the voluntary agreement entered into last
year by UK Finance working with the FCA. Under this agreement, 59 authorised lenders
representing 93 per cent of the UK’s residential mortgage market have agreed common
standards to help existing borrowers on reversion rates who are up-to-date with repayments
but, because of stricter affordability criteria, are currently ineligible, to move
to an alternative product provided by their lender, where said lender is able to offer
alternative products.</p><p> </p><p>HM Treasury has also worked closely with the FCA
on their Mortgages Market Study and their planned changes to affordability assessments.
These changes remove the regulatory barriers which previously might have prevented
borrowers from accessing new mortgage deals, regardless of whether they are with active
or inactive lenders. HM Treasury will continue to work closely with the FCA once the
changes to their rules are implemented, to monitor the impact this will have on the
market.</p>
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