Expect more enforcement action on poor arrears handling, says the FSA
Share
The Financial Services Authority has warned the industry to brace itself for more fines for the poor handling of borrowers in arrears.
In April Kensington was fined £1.23m for the unfair treatment of borrowers in arrears and ordered to pay redress of up to £1.07m.
This followed GMAC-RFC’s £2.8m fine last October for hitting borrowers in arrears with charges that the regulator deemed excessive and unfair. It was forced to pay up to £7.7m in redress.
Ed Harley, director of mortgage policy at the FSA, says: “There are cases we are working on and you may hear more from us in this area this coming year.”
Last Friday the regulator beefed up its rules for lenders dealing with those in arrears as part of its Mortgage Market Review.
It has ruled that companies must not apply a monthly arrears charge where an agreement is already in place to repay the arrears.
Payments by customers in financial difficulties must first be allocated to clearing missed monthly payments rather than arrears charges, which can be repaid later.
Companies are also required to record all their arrears handling telephone calls and retain these recordings for three years.
Lesley Titcomb, director of small firms at the FSA, says: “These rules make clear the standards we expect of firms and we have already taken tough action against some of the worst offenders.”
If you enjoyed this article, sign up here to receive daily email updates from Mortgage Strategy and Follow @mortgagestrat
