Lenders Told To Treat Bad Credit Cases Fairly
As the effects of the credit crunch continue to have an impact on many individuals in the UK, with the prospect of worse to come over the course of the next twelve months, a large number of people are facing the situation where they are falling into arrears on their secured loans and home owner loans.
In fact, banks and building societies are starting to see record levels of arrears on their customers’ loan accounts, even those who have previously had a clean credit history and not just those with bad credit loans.
But lenders are now being forced to be even more careful of how they deal with arrears cases on their secured loan books, since the Government issued its recent rescue package and now the Financial Services Authority (FSA) has written to the heads of all home owner loan companies to ensure that they are meeting the requirements for treating their loan arrears customers fairly.
The letter from the FSA is a follow up to a previous investigation by the regulator, which found that a large number of lenders did not adequately meet the necessary standard on their arrears handling procedures, particularly for those customers with bad credit loans. The FSA letter clearly instructs lenders to critically review their practices and procedures with regard to arrears handling to ensure that they are doing all they can to treat customers fairly.
Jon Pain of the FSA said “Conditions in the mortgage market are difficult and it seems likely that these conditions will persist for some time. In such a challenging operating environment it is particularly important for senior management to ensure the fair treatment of customers, including when they go into arrears.
The fair treatment of customers in arrears will continue to be a priority for the FSA throughout 2009. Where we find that lenders are not complying with our requirements we will make appropriate and properly targeted use of our existing regulatory tools, which may include enforcement action.”
