Lenders issued warning to treat borrowers fairly

Posted under Advice by Jermaine

The Financial Services Authority (FSA) has issued stern warning to mortgage lenders with 31 January 2009 deadline to prove that they have given fair treatment to customers facing repossessions or arrears.

The FSA rules pertaining to treatment of customers in mortgage arrears demand a written policy from lenders defining efforts being put in to enable customers in paying back arrears over mutually agreed time frame. Customers are required to be provided independent advice and repossession has to be used only as the last resort.

The FSA initiative has been welcomed by the director general of the Building Societies. He emphasised that borrowers struggling to make payments should be heard sympathetically and offered proper advice by the lenders. The borrowers are advised to take all necessary steps to retain their properties and think of repossessions only as last alternative.

FSA had conducted a survey earlier this year and found that there were serious concerns about lenders’ high handedness in dealing with repossessions and arrears. The Council of Mortgage Lenders had reported that 168,000 borrowers were a minimum of three months in arrears by end of September.

In the coming two months from now, lenders are required to inform FSA about the measures taken by them in implementing the guidelines laid down by FSA and would have to sign up their commitment for implementation of guidelines.