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Consumer panel calls for rethink on arrears

The Financial Services Consumer Panel has again criticised the FSA for not going far enough to protect consumers in its plans to regulate mortgages.

In its response to the regulator&#39s first mortgage consultation document, the panel says there should be tougher rules to stop len ders unfairly penalising borrowers in arrears.

It accuses lenders of forcing defaulters to pay off loans in an unfairly short period, selling houses for unnecessarily low prices and chasing borrowers for resulting shortfalls.

The panel says lenders are failing to abide by the law and it “does not accept that allowing borrowers to enjoy their rights would pose any significant risk to depositors”.

The panel is also calling on the FSA to establish training and competence req uirements for supervisors of admin staff in companies which deal with mortgages.

The panel warns that poor-quality admin could be highly detrimental to borrowers und ertaking such big transactions and points to a recent Banking Ombudsman report in which wrongly calculated mortgage repayments were one of the main areas of complaint.

Chairman Colin Brown says: “Lenders often fail to treat borrowers in a even-handed way. We want the rules to require lenders to give due weight to the rights of consumers when negotiating settlements and repayment periods. The FSA could go further.”

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