Last week the Financial Services Authority indicated that some lenders are failing to abide by the rules on arrears yet it is curiously failing to censure them for this.
It says it has not finished its work on arrears management processes and will report its findings in June.
If there is even a hint of foul play, lenders should be told this will not be tolerated because consumers need protection. Isn’t that what the FSA is for?
We don’t know what horrors the FSA will expose in the summer but there’s already enough evidence from other sources to suggest consumers are being forced out of their homes before all other avenues have been explored.
This evidence often comes from charities such as Citizens Advice Bureau but it also comes from borrowers who tell their stories to the national press.
Last year I wrote a story about a woman hounded by her lender for five years and repeatedly threatened with repossession because she was behind on her repayments. The reason she had fallen into arrears was that she’d had a serious car accident and lost her job. She had no income but her lender knew she was waiting for her personal injury compensation to come through so she could clear her mortgage.
Evidence also comes from lenders admitting they are now more eager to repossess homes.
Think back to Northern Rock’s interim re-sults last year and you’ll remember it admitting it was resorting to repossession much earlier in the arrears process than in previous years. The phrase ‘what goes around comes around’ springs to mind.
Of course consumers have to pay what they owe but lenders should treat mortgage debt with extra sensitivity given that it could result in home owners being thrown onto the streets.
And lenders should also remember that they are partly to blame for the soaring number of repossessions, with their irresponsible lending decisions.
It’s not just bullying from lenders that’s a problem. Borrowers are charged exorbitant fees when they fall behind with payments. Last year some big high street lenders were exposed for charging up to £100 for so-called debt advice when they were really operating debt collection services.
Undoubtedly, not every lender is guilty of poor practices and even those that are probably treat most of their customers fairly. But that’s not good enough – all clients de-serve a fair crack of the whip.