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FSA crackdown on poor arrears handling

FSA crackdown on poor arrears handling

Category: Mortgages

Updated: 23/06/2009
First Published: 23/06/2009

MONEYFACTS ARCHIVE
This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.
The Financial Services Authority's (FSA) latest review has found continue weakness in the way specialist lending firms and third party administrators are handling house repossessions and mortgage arrears.

The body has referred four firms to enforcement for investigation, with several more being assessed for referral.

Specifically, the FSA found that poor practice was still widespread, with the main complaints including: operating an approach focused too strongly on recovering monies without considering the borrower's individual circumstances; being too ready to take court action; imposing arrears related charges unfairly; and specialist lenders not exercising sufficient oversight of contracted third party administrators.

All firms investigated are required to take action to prove that they are addressing the problems outlined in the arrears review.

Firms were warned by the FSA last year that failing to treat customers fairly was wholly unacceptable and would not be tolerated. Homeowners have been told to contact the Financial Ombudsman Service if they are unhappy with their particular mortgage lender.

The announcement comes as new data from the FSA shows the number of consumers facing arrears and repossessions continues to increase, although the Council of Mortgage Lenders has today revised their prediction in the belief that their original repossession estimates were overzealous.

"In the current market conditions, with our data showing more people struggling to meet their mortgage payments, it is vital that firms treat customers who get into arrears fairly," said Lesley Titcomb, FSA director responsible for the mortgage sector.

"It is unacceptable that some firms are applying fees unfairly and are pushing customers towards repossessions without considering alternatives."

Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.

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