MorganAsh comments on Bank of England MPC decision

02 February 2023

Andrew Gething, managing director of MorganAsh said: “With a clear mandate to reduce inflation it is no surprise to see the half-point hike announced today. There are solid indications that inflationary pressures are reducing, so there is a fair chance this increase will not need to be repeated.

“While it is painful for mortgage borrowers, we need to put in perspective the very low rates the mortgage market has enjoyed were unsustainable, and hoping they will return to such low rates is unrealistic.”

“With every successive rate rise, consumer vulnerability becomes an even bigger factor. The heavy burden of higher mortgage payments will stretch borrowers and force many to make difficult compromises, particularly when it comes to protection and insurance. With Consumer Duty just months away, the FCA has rightly identified a significant shortcoming in preparation by firms to measure vulnerability and monitor customer outcomes.

“As more consumers potentially display vulnerable characteristics, firms must place greater emphasis on their monitoring and data strategy. Not only is it essential in protecting customers and ensuring fair value but delivering good outcomes as required by Consumer Duty. All the above have been identified as key areas of focus for firms by the FCA.

“Recent bad press on the treatment of vulnerable consumers by the energy sector should be taken as a warning that pressure may well come from the consumer as well as the regulator.”