CML defends UKAR’s stance on arrears

The Council of Mortgage Lenders has defended UK Asset Resolution’s decision to contact borrowers if changes in their financial profile suggest they may be at risk of falling into arrears.

It was revealed last week that UKAR, the holding company for Bradford & Bingley and Northern Rock Asset Management, is contacting borrowers it believes could run into difficulties paying their mortgage and conducting additional credit checks on such consumers.

The CML says that the national media responded to the story with an attitude of righteous indignation, which it believes was misplaced.

In its latest News & Views newsletter, the CML says: “As far as we can see, the picture of what lenders are doing is both prudent and less dramatic than the coverage suggests.”

The trade body says it has contacted a variety of large lenders, including UKAR, and has established that they all operate their customer contact practices in line with their data protection obligations.

The CML says it is in borrowers’ interests to be made aware of what steps they could take now to avoid encountering mortgage payment problems later, once interest rates begin to rise.

And it warns that the media response to UKAR’s initiative could prevent other lenders from adopting similar schemes.

The CML says: “Prioritising debts and spending is an important part of avoiding mortgage difficulties and repossessions.

“But the opinion backlash against contacting borrowers before they have missed mortgage payments, as exhibited in the recent furore, is hardly likely to inspire lenders who might be considering such a measure to believe that it would be received in the spirit intended – even if they think it could help customers.”