Deadline set over fairness to mortgage customers
December 18, 2008
Over recent months the government has been trying to bring in new guidelines and rules in relation to mortgage lending, to ensure that mortgage customers are treated fairly by banks and lenders in the current difficult financial climate. Recently lenders have agreed that they will now wait at least three months before taking any repossession action in the event that a homeowner falls into arrears with their mortgage repayments, which gives the customer more time to reach an effective solution with the lender or to catch up with repayments.
It has also been reported that lenders have now been given a deadline of the end of January to prove to regulators that customers who are in arrears or are facing repossession are being treated fairly. The Financial Services Authority has slated the treatment of customers in arrears in the past, and this was met with criticism from agencies such as the Council of Mortgage Lenders, which said that it was unfair for all lenders to be tied to the same brush, as it were.
An official from the FSA has written to mortgage lenders with regards to the treatment of customers in this situation, stating: “Conditions in the mortgage market are difficult and it seems likely that these conditions will persist for sometime. In such a challenging operating environment it is particularly important for senior management to ensure the fair treatment of customers.”
A senior official from the Council of Mortgage Lenders has added: “Lenders understand that in the current difficult economic environment there is bound to be a high level of scrutiny of their handling of mortgage arrears.”
An official from the Building Societies Association also commented, stating: “With arrears forecast to increase over 2009, it is essential that all lenders ensure that their arrears and repossession policies treat customers fairly. Building societies want their borrowers to remain in their homes if they have repayment difficulties, and genuinely view repossession as a last resort.”
As part of new measures lenders will have to ensure that they give borrowers reasonable time to clear arrears, will need to wait three months before starting repossession proceedings, and will have to have written policies in place with regards to the fair treatment of customers. If a case does go to court for repossession the lender will have to be able to prove that all steps necessary have been taken to try and resolve the issue before legal action was taken.
In the meantime banks are being asked to review their existing written policies to check and see whether customers in arrears are indeed being treated fairly, and if not changes will need to be made in order to ensure that fairness is exercised with these customers. If lenders do not adhere to the rules with regards to fairness the regulator will be taking action and could slap hefty fines on the lenders in question.
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