Unfair lenders face FSA wrath
The Financial Services Authority (FSA) is threatening to fine banks and building societies that are heavy handed with homeowners who fall into arrears with mortgage repayments.
The regulator has written to the chief executives of mortgage lenders, giving them until 31st January to review their policies.
The FSA’s managing director of retail, Jon Pain, explains that conditions in the UK mortgage market are likely to remain difficult for some time and that lenders’ senior management need to ensure the fair treatment of customers.
The Council of Mortgage Lenders is supportive of the move, saying that in the current difficult economic environment its members expect a high level of scrutiny over mortgage arrears, while the Building Societies Association has reassured that it genuinely views repossession as a last resort.
Under FSA rules, lenders need to show that they have made reasonable efforts to allow customers to pay off arrears over time.
They are also obliged to advise homeowners struggling with repayments that they can obtain independent advice.
The regulator’s action follows an agreement with major lenders that repossession proceedings will not be commenced until borrowers are at least three months in arrears with repayments, as outlined in the recent Pre-Budget Report of Chancellor of the Exchequer, Alistair Darling.
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