View more on these topics

Watchdog bares its teeth on arrears management

The Financial Services Authority is proposing to tighten its rules on lenders’ arrears management processes in response to issues flagged up in last year’s Mortgage Market Review.

The FSA says its crackdown on arrears handling also reflects its ongoing work in this area, which it says has uncovered high levels of consumer detriment – particularly in the specialist lending sector.

The key proposals from the regulator are to:

  • Make it plain that firms must not add early repayment charges onto their arrears charges or any interest that might be levied on those charges.
  • Clarify that companies must not apply monthly arrears charges in a situation where the lender and the borrower have agreed an arrangement to repay arrears.
  • Compel lenders to consider all options for borrowers – in other words, repossession should always be a last resort.
  • Confirm that payments by customers who are experiencing financial difficulties should first be allocated to clearing any missed monthly payments rather than be put towards paying off arrears charges which can be repaid at a later date.
  • Oblige companies to record all telephone calls made in relation to the subject of arrears, and keep all records for three years.

Meanwhile, the regulator plans to extend its approved persons regime in the mortgage sector, saying such an expansion will bring significant benefits for consumers.

The FSA says it made it clear through the MMR that it wanted a strong, viable and clean marketplace in the mortgage sector and its requirement for advisers in that market to prove they are fit and proper to perform their role will help to remove dishonest individuals from the industry and keep them out.

Lesley Titcomb, the FSA director responsible for the mortgage sector, says: “Our latest proposals serve to highlight the standards that firms in the mortgage market must meet, and they should help to ensure that home owners in financial difficulty are treated in a fair manner.

“Lenders should be in no doubt with regard their obligations to customers who fall behind with payments. They must realise that such circumstances are not an opportunity for them to generate more profits.”


CML not bluffing over FSA review

From its inception four years ago, Mortgage Strategy’s sister title Lending Strategy ran a column called Coogan’s Bluff in which Michael Coogan, director general of the Council of Mortgage Lenders, penned an 800-word tongue-in-cheek piece on an issue of the day. It is rare to find a bureaucrat with a sense of humour, let alone […]

An outsourcer for all seasons

The benefits of lenders outsourcing non-core operations to specialist firms remain valid whatever the economic backdrop, says Jeff Quilter, director of strategy at HML

Mortgage Times capital shortfall totalled almost £1m, FSA reveals

A capital shortfall of almost £1m has been revealed as the reason behind the Financial Service Authority’s decision to strip Mortgage Times of its permissions just before Christmas. Last week the FSA revealed that on December 23 it took away Mortgage Times’ permissions, just two days after the network told its appointed representatives that it […]

'Feeling the Squeeze'

Royal London carried out a UK wide survey with 2,500 consumers age 35-44 over the summer. The survey found that over a third, 34 per cent, said their finances felt Squeezed and so were struggling to meet day-to-day expenses, despite 87 per cent being aware that they need to save more. However, the survey did […]


News and expert analysis straight to your inbox

Sign up