FSA cracks down on arrears and sale and rentback
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The FSA has set out new rules to protect borrowers in arrears and customers of sale and rentback firms.
From June 30, 2010, firms will not be allowed to apply a monthly arrears charge where an agreement is already in place to repay those arrears.
Customers in financial difficulties must first be allocated to clearing the missed monthly payments, with arrears charges being repaid later, while the regulator also wants firms to consider all other options for borrowers, with repossessions being the last resort.
All firms must also record all arrears handling telephone calls and keep the records for three years.
Sale and rentback customers will also be offered a greater level of protection through a raft of new rules including a five-year minimum security of tenure for customers, while risks must also be signposted to the customer, through FSA literature and during the sales process.
These include banning of exploitative advertising and high pressure sales.
The rules also ban cold calling and promotional leaflets through letter boxes and introduce a 14-day cooling-off period to allow costumers to make better decisions on sale and rentback.
FSA director responsible for the mortgage sector Lesley Titcomb says: “With cases of vulnerable homeowners evicted from their homes after 6-12 months after selling to unscrupulous sale and rent back companies, tighter controls were vital. Sale and rent back is often used by those who want to sell in a hurry to stay in their home, and so it is vital that they are better protected during what is usually a difficult period financially.
“We also think it is wrong that arrears charges should be taken from customers already in difficult circumstances and trying to get their finances back on track. Today’s rules make absolutely clear the standards we expect of firms, and we have already taken tough action against some of the worst offenders.”
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Readers' comments (2)
The FSA walks on water | 25 Jun 2010 11:06 am
It would appear the present new rules do not create quite enough paper to fell a rain forest therefore the following has been added:
1. Possession of the property can now only arise following the bankruptcy of the lender.
2. To enable the borrower to contact the lender mobile phones must be provided, at no charge, for all members of the family concerned.
3. Once a month while in arrears lenders must pay for a family pizza delivery to the borrower(s).
4. Should the arrears be repaid within a 10 year period then the lender, as a reward, and in the sprit of TCF, should pay for a holiday for the borrower(s.
5. Finally, on a slightly more sombre note let us not forget the immortal words of Winston Churchill who indeed prophesised the coming of hopelessly bureaucratic quangos and apparently argued:
“These people will act as though they walk on water and yet I would contend that for a nation to try to regulate itself into prosperity is like standing in a bucket, and trying to lift yourself up by the handle.”
...Nuff said.
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Anonymous | 25 Jun 2010 5:39 pm
Hear hear!!
Is it not time for borrowers to start taking some responsibility for their own actions?
It would be good to see the FSA attempting to stick to their core remit of actually regulating the industry...not acting as a political enforcer - 'punishing' any business and every business without rhyme or reason in an attempt to look as though they are doing something useful.
Useless.
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