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FSA to take action against more firms over arrears handling

The Financial Services Authority has today published its annual report for the year 2010/11, in which it warns there will be more action taken against firms for treating customers in arrears unfairly.

In its report it says: “In January we announced the publication of the 101st mortgage broker prohibition. We have also taken tough action in mortgage arrears cases where firms have not treated customers in arrears fairly and failed to give consumers the protection they deserve.

“There will be further action in this area in the coming year.”

In April 2010 it fined Kensington Mortgage Company £1.225m in relation to its mortgage arrears handling processes and its dealings with customers in arrears and in July 2010 it fined Redstone Mortgages £630,000 for failings in relation to its mortgage arrears.

More recently it fined DB Mortgages £840,000 for irresponsible lending practices and unfair treatment of customers in arrears.

Across all sectors it published Final Notices imposing a record £98.5m in financial penalties during the year.

Also in its report the regulator says over the last year, it has also made progress in the mortgage market towards implementing intensive supervision of conduct issues, both on a firm-specific and sector-wide basis.

It says: “We have developed an approach to test firms’ business models and assess whether they pose any inherent risks to consumers and to assess the quality of the outcomes that consumers are receiving.

“We have completed our assessment programme for smaller firms and used the lessons learned from it to develop a revised supervisory approach that is more proportionate and risk-based.

“We recognise that there will always be instances where firms fail to treat their customers fairly and have therefore retained our focus on addressing these issues.”

The annual report also reveals the annual salary of FSA chairman Adair Turner, who received a salary of £426,000  in the year, but no bonus.

Hector Sants, executive director of the FSA was paid a salary of £500,000 and other emoluments and benefits of £131,000, and a bonus of £115,000 while £60,000 was paid into his pension, giving him a total pay package of £806, 810, compared to £773,067 the previous year.

Margaret Cole received a £191,722 salary, with a performance related bonus of £28,603, her total pay packet was £263,686 once all the benefits had been accounted for.

Commenting on the report, Tuner, says: “The past year has seen further progress on the major changes in regulatory and supervisory approach already underway at the FSA, alongside our preparations for the structural changes announced by the government last June.

“We will remain focused on our statutory objectives until the formal move to the new structure and have continued to make strong progress in delivering our priorities. This wouldn’t have been possible without the commitment and professionalism of our staff.”

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  • Bryan Jones 14th June 2011 at 2:51 pm

    The regulator needs to realise that any action they take doesn’t create or destroy any value. Nor does it create or dstroy risk. Their actions merely squash the jelly (ie cash or risk) into a different shaped mould.

    So if a lender lets a borrower off a few payments, or changes the terms of their lending to one which makes it more risky for the lender, that is all fine and dandy for the TCF to the borrower, but isn’t it ruining shareholder value, who too are…essentially customers through their pension plans and insurance funds. Has no-one heard of Newtonian physics? If you jigger a market to be “nice” to one group of customers, then you are by definition being “nasty” to another group. Its a zero-sum game. Unless you believe in the magic money tree of never-never-land.

  • Daniel 14th June 2011 at 8:57 am

    £806,810? I need not add further comment – I’m sure most people will be thinking exactly the same thing.

  • Gillian 13th June 2011 at 7:12 pm

    Is it right and is it fair to the public, and therefore is it Treating Customers Fairly, to have kept them in their homes for the last 2 / 3 years paying the minimum amount off their mortgage debt which is now likely to be in excess of £10k and a lot more in some cases especially when costs, interest and fees have been added while that property has reduced in value by approx 15% to 20% and now when they will have to be repossessed they are forced into a rental market, because their credit rating is totally shot, that is approx 20% higher than it was at the start of this process. I think maybe the govenment and the FSA should look a little closer to home before they start dishing out fines and reprimands and look at themselves.