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FSA warns lenders about arrears regulations

The Financial Services Authority has issued a warning to all lenders to comply with its arrears regulations, particlarly when using third-party outsourcing firms.

In its Mortgage Lenders’ round-up newsletter for December it says that after Christmas Day any third-party outsourcer who does not record phone calls with those in arrears will be breaching the lenders’ obligations.

It says: “We would like to remind lenders that it is their responsibility to ensure that the appropriate recording systems are in place, even if they have outsourced this role.

“After December 25 any party who, on behalf of a lender, is discussing the sums due with borrowers who are in arrears without call recording will need to stop or they will be putting the lender in breach of their regulatory obligations.”

The FSA introduced tougher arrears regulations in June for all mortgage lenders.

Speaking to Mortgage Strategy last month Kevin Friend, strategic partner-ships director at Mortgages.co.uk, says lenders were not sticking to the rules.

He says he has dealt with several borrowers who are having difficulty repaying their mortgages and loans and that 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 regulations 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.

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