Guidance Notes Published On Loan Arrears
Earlier this week the Government issued new protocols to the courts for use with cases of repossessions, where home owners have fallen into arrears with the repayments on their mortgage or home loan, which are designed to protect the interests of home owners and make repossession a last resort of the lender.
On the back of these changes, the Council of Mortgage Lenders (CML) has introduced their own guidelines for lenders in order to ensure that their arrears handling procedures comply with the new requirements.
In compiling the guidelines, the CML has taken into account the Financial Services Authority’s (FSA) rules on how mortgage and home loan providers should handle arrears and possession cases, along with their “treating customers fairly” principles.
The CML has also been in discussions with various advice agencies, such as the Citizens Advice Bureau (CAB), to ensure that the guidelines meet the needs of both lenders and those borrowers who may be in arrears with their loan so that repossession may be avoided wherever possible. The guidelines have been welcomed by consumer protection organisations who say that the notes will help strengthen suitable procedures for responsible lenders and also provide helpful advice for borrowers who may be struggling with their loans.
Michael Coogan, Director General of the CML said “Despite the fact that the rate of repossession is modest, we recognise that there is a significant public concern about this subject. The new guidance should help to reassure consumers that lenders are genuinely committed to seeing repossession as a last resort and that checks and balances that protect consumers are in place.”
Teresa Perchard of CAB said “People facing payment problems worry about whether they will get fair treatment and may put off seeking advice as a result, but the earlier people seek advice, the better. We welcome this guidance, which acts as a good yardstick for borrowers and money advisers about the kind of practical treatment they might expect to see from responsible lenders.”
