MMR: FSA beefs up rules on arrears
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The Financial Services Authority has beefed up its rules surrounding arrears after finding a wide difference in the fees firms were charging and many firms unable to even explain why they charged the fees that they did.
In its Responsible Lending review today it has changed MCOB 12.4.1 R so that arrears fees must reflect a reasonable estimate of the additional administration undertaken by firms.
Firms can no longer charge arrears administration fees that are a percentage of the outstanding arrears or debt.
Quarterly or annual arrears charges can no longer be charged to borrowers who are only in arrears for a short time.
It is proposing to limit the number of times fees for missed payments are charged.
It says: “We consider that it is unreasonable and unfair to continue to try and take payments from a borrower in arrears, with the resultant charging of administration fees, more than twice a month. In most cases, this is unlikely to result in payment of the shortfall by a borrower and simply exacerbates their payment difficulties.”
Also the FSA has now widened MCOB 12.4.1 R to payment shortfalls as well as arrears.
