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MPs slam FSA’s “leisurely” approach to arrears review

The Treasury select committee has slammed the FSA for its “leisurely” approach to the mortgage arrears review and says it fears some lenders are using arrears charges as an alternative profit stream.

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.

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Comments

There are 5 comments at the moment, we would love to hear your opinion too.

  1. Hector needs to get his House in order
    It is not long since Hector Sants said that Principles Based Regulation doesn’t work with those who have no principles and firms should be afraid.

    The FSA needs to promote an image like the traditional bobby – feared by the villain but a friend to the law-abiding not, as is now perceived, feared by the conscientious IFA and mortgage broker but, to all intents and purposes, ignored and cowed by the big boys.

  2. FSA Arrears Review
    As an IFA sometimes you read an article and immediately you know something is wrong.

    Now if someone is having difficulty meeting Mortgage Repayments there is a clear need for advice and guidance, perhaps even a little Hand Holding and sympathetic approach and I am sure this goes on with some lenders (ok a few). It has to be in everyones interest for the borrower to remain the home etc etc.

    We therefore have a lenders doing some of the above and of course charging a handsome level of fees for it.

    I can think of several expletives which summarise my thoughts on this however will refrain here.

    The FSA must stop lenders handling Mortgage Arrears in any manner which is not helpful in providing a reasonable outcome. More importantly the FSA must hand out a Penality or force compliance.

    And it must do it urgently.

  3. FSA
    Sometimes I wonder whether I have misunderstood how the financial regulation works in this country. Could it be that the FSA is run and owned by the lenders or have I got that wrong??

  4. MPs slam FSA’s “leisurely” approach to arrears review
    Fsa.gov.uk has always used consumer protection a the scape goat to protect ‘Product Providers’ to detriment of public while governments past and present has given them a blank cheque to destroy and crucify one man business and partnerships, in the interest of providers, networks and company arm of the providers. Ultimately the fsa.gov.uk is answerable to Chancellor of the Exchequer, this article reminds me of Pontius Pilate washing his hand before the crucifixion.

  5. MPs slam FSA’s “leisurely” approach to arrears review
    MP’s slam FSA, FSA grilled by the Treasury Select Committee, FSA £12.2m in the red, FSA criticised for refusing the allow IFA’s the protection of English Law, FSA has facilities to borrow as much as £200m from the very banks it’s supposed to be regulating, FSA presiding over an uneven and skewed regulatory field, FSA blows £20m on highly questionable bonuses for its staff and directors, FSA pays off Clive Briault with golden parachute of £534,000, FSA blows endless sums of industry money to avoid indentifying the LAUTRO 19, FSA criticised for regulating always by hindsight, FSA blames lack of regulation of KeyData products on HMR&C, FSA accused of cronyism with the Banks, FSA claims itself to be independent of government, yet Lord Turner admits to Parliament that it was instructed by the Treasury to lay off the banks, FSA spends unconscionable sums of money on outside consultation exercises, FSA blows vast sums on expensive original works of art to adorn its office walls, FSA criticised for having refused to listen to third party warnings of an impending financial meltdown as a result of almost zero regulation of the banks. And those are just the things I can think of straight off the top of my head. The headline I’m really looking forward to is FSA scrapped as a national disgrace.

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