FSA finds poor practice in arrears and repossessions sector
Date posted: 23 Jun 2009
Lending rules may have been breached by several companies over the handling of mortgage arrears and repossessions, according to the Financial Services Authority (FSA).
Four firms have been referred to enforcement for investigation and several more are being assessed as part of a review of the industry by the FSA.
Data collected by the regulator indicates that the value of outstanding loans in the first quarter of 2009 stood at £1,200 billion, increasing by two per cent compared to the previous year.
This increase in the number of individuals facing arrears and repossessions has been coupled with a decline in their treatment by third party administrators, the FSA indicates.
The review revealed that firms are too ready to take court action, impose arrears-related charges unfairly and are focused too strongly on recovering arrears without reference to borrower's individual circumstances.
Lesley Titcomb, FSA mortgage sector director, explained: "It is unacceptable that some firms are applying fees unfairly and pushing customers towards repossession without considering alternatives.
"The steps we are announcing today demonstrate that proper handling of arrears is still a high priority for us and will continue to be so until the necessary progress has been made."
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