Whistleblowers have accused mortgage lenders of fuelling a repossession crisis by aggressively chasing arrears instead of helping borrowers with debt problems.Two debt counsellors and a broker have lifted the lid on alleged unscrupulous practices that see lenders sending debt counsellors to chase missing mortgage payments. The debt counsellors are said to typically advise clients to prioritise mortgage payments to such an extent that payments on loans and credit cards are dramatically reduced. Unsecured lenders are then said to be applying for a charge on the property that could lead to repossession. Debt Solutions managing director Howard Wilson, who used to be a debt counsellor for BM Solutions and GMAC, says: “Unsecured lenders are taking debtors to court and securing charges on the property. Counsellors do not care about residual debt.” The use of the phrase “counsellor” has also been critic- ised for disguising what could amount to a collection service as a help session that can cost the customer £120 per visit. Which? principal researcher Teresa Fritz says: “There has to be prioritisation but lenders must show sympathy. I would only take debt advice independently. If they are calling themselves counsellors, that is deceitful.” Many debt counsellors are not permitted by their employer to recommend alternative mortgage arrangements such as switching to interest-only, reducing payments, payment holiday or remortgaging, which could help a client get their finances in order. MCOB rule 13.3.2 states that lenders must make “reasonable” efforts to reach an agreement with a customer over any payment shortfall. Another unnamed debt counsellor says: “I am effectively paid to be a debt collector and I am no longer a debt counsellor. Nine out of 10 people are unaware that they can get a remortgage.” Lender Kensington has been criticised by broker Ashtons Financial Services consultant Tim Christian for pressurising his client into paying off a mortgage without giving any help or offering other options. Christian says: “The aver- age client will not have a clue and brokers should warn their clients.” Kensington spokesman Alex Hammond says: “These are debt counsellors, not debt advisers. They can talk about but not give advice on the prioritisation of payments.”
O&M Systems director Jason Wykes asks just who is the customer that needs to be treated fairly – the employer who pays a benefit consultancy to encourage members to leave a DB scheme or the member who is about to give up valuable retirement benefits for a flat-screen TV and an unexpected tax bill?
GMAC is liaising with the Council of Mortgage Lenders to revise the trade body’s methods used to calculate its lender league table. The problem GMAC has highlighted is that majority of lenders in the 30 listed have figures calculated on a calendar year basis but there are seven lenders with different financial year-ends, so they […]
Private medical insurers are creating uncertainty for members of PMI schemes because they have differing approaches to cancer therapies.Watson Wyatt is warning employers and especially those that operate self-funded arrangements to ensure they are aware of the PMI providers’ stance on cancer treatment as it could impact financially on scheme members.The use of Herceptin and […]
Schroders Investment Management
Global Energy Fund
The Artemis UK Smaller Companies Fund has delivered good returns through the bull market. But its cautious style is better suited to the trickier times which could be coming, says manager Mark Niznik.
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