Third party firms not sticking to arrears rules

Some third party outsourcing firms have been accused of failing to adhere to guidelines on arrears that the Financial Services Authority put in place in June.

Kevin Friend, strategic partner-ships director at, has dealt with several borrowers who are having difficulty repaying their mortgages and loans. He says he has seen a number of examples of firms failing to adhere to the rules on arrears management and the principals of Treating Customers Fairly.

He says: “I can’t see that much has changed since the new regula-tions came into force. Borrowers who are experiencing payment shock and arrears, or are facing repossession are not being treated fairly.”

He claims some third party out-sourcing firms are using old service scripts when dealing with clients, which is causing many borrowers unnecessary distress.

He adds: “I’ve seen reasonable offers rejected due to poor scripting and bloody mindedness.”

In one case he dealt with, £10,000 was accepted from a borrower on the premise that repossession action would be stopped, but on receipt of the funds the third party outsourcing firm dealing with the client continued to take action.

The FSA has been investigating whether lenders have been complying with its arrears rules over the last two years.

GMAC-RFC, Kensington Mort-gage and Redstone Mortgages, were all fined for arrears management failings and a further five firms are still on enforcement.

The policy statement that was released by the FSA in June on arrears clarified the requirements already in place, with the addition of some new measures such as telephone recording.

But Friend says he continues to see examples of bad practice such as lenders using satisfied reposse-ssion orders on the same client to obtain an eviction order.

He’s calling on all lenders to ensure that they have a represen-tative within third party outsourcers to ensure the firms are adhering to the FSA’s new rules and accepting responsibility for arrears and repossession handling.