The Financial Conduct Authority (FCA) has issued an urgent warning that so-called promissory notes, promoted online as a way to clear mortgage debts, are worthless and could worsen financial troubles. These documents, often sold for £500 or more, falsely claim that a trust or other entity will cover mortgage payments or that the note itself should be accepted by lenders as full settlement.
Greg Sachrajda, head of department in retail banking market interventions at the FCA, said: “We have had a number of lenders reporting increasing numbers of borrowers trying to use these promissory notes to clear the mortgages.” He emphasised that the notes are “just an empty promise” and do not constitute a valid payment method.
Homeowners who submit such notes are often already in financial difficulty and may be lured by the promise of a “golden ticket” to become debt-free. However, the FCA warns that using them can lead to paying significant sums for something worthless, while failing to engage with lenders who could offer genuine help.
Lenders are required to treat borrowers in difficulty fairly and may offer options such as extending the loan term, switching to interest-only payments, or agreeing a payment holiday. In extreme cases, an assisted voluntary sale may be arranged. The FCA advises borrowers to contact their lender directly rather than waste money on promissory notes.
