The regulator has written to the chief executives of all mortgage lenders and mortgage administrators giving them until January 31 to ensure that their customers facing arrears are being treated fairly.
The letter is the second warning to lenders from the FSA in recent months. It comes in light of its earlier review which found weaknesses in arrears and repossessions handling, particularly in the impaired credit sector of the market, and the fact that increasing numbers of households are at risk of repossession.
The FSA expects the senior management of mortgage lenders and administrators to critically review current arrears policy, critically review current management practices and procedures and assess whether borrowers in arrears are being treated fairly.
The FSA expects firms to address any weaknesses as a matter of urgency.
FSA retail managing director Jon Pain says: “Conditions in the mortgage market are difficult and it seems likely that these conditions will persist for sometime. 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 consumers 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”