FCA finds ‘inconsistencies’ in mortgage lenders arrears management practices

Today the Financial Conduct Authority (FCA) has revealed that it found “some inconsistencies” in how mortgage lenders treat customers who have long-term mortgage arrears.

Previously the regulator highlighted that there was a trend of increasing long-term arrears cases, whilst the number of homes being repossessed is on the decline. As a result of this trend, the FCA set out in its business plan 2017/18 to examine whether customers with long-term arrears were not provided with the appropriate level of support because their vulnerabilities were not identified.

The authority reported that it has provided feedback to the firms in its sample and, in some cases, was considering whether further regulatory action was required. Under the rules set out by the FCA, firms may only consider repossession as a last resort.

However, despite finding a number of inconsistencies, overall the FCA found that firms generally treated customers in long-term financial difficulty appropriately.

Where the inconsistencies have been identified, the body has urged firms that offer or administer mortgages to read the findings and, where necessary, make improvements.

Commenting, FCA executive director of supervision Jonathan Davidson said: “We know that many customers remain hesitant to contact their lender to discuss their mortgage arrears for a variety of reasons. We encourage customers to talk to their lender as early as possible as this may give them more time and options when it comes to the steps they can take.”

Furthermore, the FCA has encouraged mortgage customers with arrears to engage with their provider to discuss what options are available to them.

In response to the findings, UK Finance director of mortgages Jackie Bennett stated that it "encouraging that overall the FCA did not identify widespread harm to customers".

"Anyone with concerns about making their mortgage repayments should contact their lender as soon as possible to discuss the support and options available to them, a message echoed by the FCA," Bennett added.

“UK Finance will continue to engage closely with the regulator, lenders and administrators to deliver fair outcomes for those customers in financial difficulty.”

To read the findings, click here.

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