In its report on mortgage arrears and access to mortgage finance, the TSC also accuses the FSA of being “scared of the firms it is charged with regulating”.
The TSC says it has serious concerns that some lenders are charging “high and excessive mortgage arrears fees” to customers who fall into mortgage difficulties.
It is calling on the FSA to require lenders to provide an itemised breakdown of the additional costs their charges cover.
The report says the FSA’s principles-based approach has given lenders too much flexibility to interpret arrears rules as they wish.
It says: “The seemingly leisurely approach of the FSA in terms of completing its mortgage arrears review and enforcing possible breaches in the rules in the area of mortgage arrears is a matter of grave concern.”
Following a freedom of information request the FSA has refused to name the four lenders currently subject to enforcement action, insisting that publication would damage its relationship with firms who might then be less willing to provide the FSA with information.
The TSC says this contradicts FSA chief executive Hector Sants’ statement that firms should be afraid of the regulator.
It adds that the balance between public disclosure and the need to protect firms before they have been found guilty of wrongdoing is weighted too far towards the industry.
The TSC says: “The impression given at the moment is that it is the FSA that is scared of the firms it is charged with regulating.”
On sale and rent back, the TSC welcomes the FSA’s regulation of the sector but warns that the interim regime, in place until June 30, 2010, may not afford full protection to consumers and may give some a false sense of security.
It also wants the FSA to clarify why it has not made an independent valuation a requirement for sale and rent back schemes and whether it will do so under the comprehensive regime to be introduced in 2010.
Which? chief executive Peter Vicary-Smith says: “The last thing you need if you are struggling to pay your mortgage is to be hit with excessive charges, yet that is what some lenders are doing to their customers.
“The FSA needs to start protecting consumers who have been made vulnerable by the recession and stop protecting the commercial interests of lenders trying to evict people from their homes.
“The FSA must respond to the committee’s condemnation of its leisurely approach to enforcement by immediately publishing the names of the firms it is investigating.”
In a statement released today, the regulator says: “The FSA continues to take a robust position with firms as soon as we have evidence of wrong doing and also to ensure borrowers are treated fairly throughout the lifetime of their mortgage.”
It says it will respond to the TSC’s report in full in due course.