FSA could name and shame firms over arrears
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A clause in the Financial Services Bill could force the Financial Services Authority to backtrack on its policy of refusing to identify the firms it is investigating over arrears management practices.
The regulator has been carrying out an investigation since last June into the way some firms such as specialist lenders and third party administrators have treated customers in arrears.
In October the FSA fined GMAC‑RFC £2.8m for serious failings in the way it treated borrowers in arrears and ordered GMAC to pay up to £7.7m in redress to over 46,000 borrowers.
Although the regulator has confirmed that other firms are being investigated by the FSA’s enforcement division, it has so far refused to be drawn on which firms are under investigation.
But Jon Pain, managing director of supervision at the FSA, has told MPs today that this could be set to change.
Speaking at today’s Treasury Select Committee hearing into mortgage arrears, Pain says: “As part of the Financial Services Bill presently before parliament now there are some provisions for changing that process.
“Clearly, we await to see what progress that bill makes but if those provisions are adopted that would change the process at the stage at which a firm would be identified as part of that enforcement process.”
Pain says that even if the bill doesn’t pass through parliament the FSA will continue to revisit the issue of naming and shaming firms who are being investigated over arrears management.
The Financial Services Bill was introduced to parliament last November, and proposes the creation of a new Council for Financial Stability which will be charged with managing systemic risk and protecting financial stability both in the UK and internationally.
Lesley Titcomb, director of small firms and contact at the FSA, also appeared at today’s inquiry.
She revealed that there are currently seven firms that the FSA’s enforcement division is looking into over their arrears practices and charges.
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