01 February 10
On 26 January 2010, the FSA published a consultation paper entitled ‘Mortgage Market Review: Arrears and Approved Persons’.
In this paper, the FSA sets out a package of measures designed to strengthen its current rules on arrears handling and approved persons. These were identified by the FSA in its October 2009 mortgage market review discussion paper (DP09/3) as priority areas that need addressing.
The FSA proposes a number of measures to help to ensure that mortgage holders in arrears are treated fairly. The key measures proposed clarify the FSA’s existing arrears handling rules and introduce some new provisions. They include:
- Clarifying that firms must not apply a monthly arrears charge where a firm and its borrower have agreed an arrangement to repay the arrears. Any charge imposed should represent the cost of additional administration work.
- Clarifying that firms must not add early repayment charges (ERCs) on arrears charges and interest levied on those charges.
- Clarifying that payments by borrowers in financial difficulties must first be allocated to clearing missed monthly payments, leaving charges to be paid later.
- Requiring firms to consider all options for borrowers, with repossession always being the last resort.
- Obliging firms to record all arrears handling telephone calls and to keep all arrears records for three years.
If you have any questions about mortgage payments contact Paul Cowdery on Tel: 01256 320 555.
