A report published today by the Treasury Select Committee on mortgages paints a bleak picture of the impact the recession on households struggling with mortgage arrears and at risk of repossessions.
The report found that while the mainstream lenders are broadly complying with the Financial Services Authority’s (FSA) conduct of business rules, there was evidence of a lack of flexibility and forbearance in the sub-prime, specialist and second-charge sectors to homeowners in arrears.
The report also found that some lenders are charging excessive arrears fees and that the FSA’s principled-based approach to mortgage arrears has given lenders too much flexibility. However, the FSA has refused to name any lenders found to be treating customers unfairly.
FSA must act
Following the findings of the report the Committee has urged the FSA to take a robust stance on unfair arrears charges. Which? gave evidence to the Committee and is backing this call for swift action from the FSA.
Chief executive, Peter Vicary-Smith, says:
“The last thing you need if you’re struggling to pay your mortgage is to be hit with excessive charges, yet that is what some lenders are doing to their customers.
“The FSA needs to start protecting consumers who have been made vulnerable by the recession and stop protecting the commercial interests of lenders trying to evict people from their homes.
“The FSA must respond to the Committee’s condemnation of its leisurely approach to enforcement by immediately publishing the names of the firms it is investigating.”
Lenders not named
Which? also submitted a Freedom of Information request to the Committee asking for the names of the lenders which the FSA had found treating customers in mortgage arrears unfairly, but was turned down.
The FSA found ‘the need to protect the firms commercial interests and the FSA’s efficiency and effectiveness in conducting and maintaining open and candid exchanges of information and views with firms…’ outweighed the public interest in disclosing the information.
There are schemes to help people who may face repossession. See our guide to mortgage arrears and repossessions for more links and practical advice.
It might also be an option to re-mortgage or if you’re on a repayment mortgage, to switch to one that’s interest-only. Our mortgage finder will tell you what you could save if you switch.
Also, check out our guide to dealing with debt here for more tips and advice.
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