FSA warns lenders as repossessions rise 41%
The Financial Services Authority (FSA) is reminding mortgage lenders of their obligation to treat customers fairly.
In a recent review, the regulator found weaknesses in the way some lenders have been dealing with arrears and repossessions, particularly for consumers with impaired credit histories.
Specialist lenders raised particular concerns for the regulator, which described some firms as operating a “one size fits all” approach and being focused too strongly on recovering arrears without paying sufficient attention to borrowers’ circumstances.
According to the FSA, this group of lenders also has a tendency to take court action too readily.
The warning comes as the watchdog publishes new data on mortgage lending, which shows that the number of homeowners facing arrears and repossessions is rising.
In the first three months of 2008, new cases of repossession rose 41% to 9,152, compared with 6,471 in the first quarter of 2007.
Meanwhile, the number of home loans in arrears rose by 15% in the three months to end March 2008.
The FSA is urging lenders to maintain a flexible approach when recovering arrears and to use repossession only as a last resort.