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FCA: Lenders have ‘more work to do’ on arrears handling

The FCA says mortgage lenders must do more to ensure front-life staff treat customers in arrears fairly.

In a thematic review of lenders’ arrears management and forbearance policies, published today, the regulator says lenders’ arrears management has improved since its last review in 2009.

But it says some areas of concern remain.

The FCA says mortgage lenders and administrators need to place greater emphasis on delivering consistently fair outcomes based on customers’ individual circumstances, and ensuring front-line staff have the experience and knowledge to make informed decisions in customers’ best interests.

The review found that borrowers with sensitive circumstances, such as those dealing with bereavement or terminal illness, did not have those circumstances consistently identified or appropriately probed by front-line staff in some firms, even when they were explicitly referred to by borrowers. Referrals to specialist teams were also missed or made late in the process. 

FCA director of supervision Clive Adamson says: “Since we last looked at arrears management we have been pleased by the progress that firms have made. However, there is still work to do.

“Lenders need to treat customers in financial difficulty fairly. We want firms to take further action to strengthen their arrears management practices and invest in their systems and people to make sure that they get this right.

“We are already working with firms and trade bodies to help them embed a culture centred on delivering the best outcome for customers based on their specific circumstances.”

The review found that cultures which focus on treating customers fairly are not always fully embedded at firms, and that “rigid systems and processes” sometimes prevented staff from delivering good customer outcomes.

The FCA also says it is concerned about risks to borrowers from potential interest rate rises. It says firms should take proactive steps to identify borrowers who could be at risk from future rate rises and have strategies in place to treat these customers fairly. 

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