The Intermediary Mortgage Lenders Association (IMLA) has hit back at the FSA for suggesting specialist lenders are not adhering to TCF principles when handling arrears.
The trade group says its members work hard with borrowers to ensure effective solutions to debt management can be found.
In an FSA report released today, seen in advance by IMLA, the regulator criticises lenders for their handling of customers who are struggling to meet rising mortgage costs.
Peter Williams, chief executive of IMLA, says: “IMLA strongly contests the suggestion made by the FSA that all specialist lenders systemically operate a ‘one size fits all’ approach to arrears management.”
He says all IMLA members comply with MCOB 13 rules, which state that lenders have to work to reach a reasonable agreement with a borrower in difficulty.
IMLA claims it is in the best interests of its members to ensure borrowers can keep their homes and an arrangement can be made, particularly in tough economic conditions.
“While lenders clearly have to make commercially viable decisions when managing arrears, keeping people in their homes is preferable in a market such as this. By repossessing assets and selling them at a discount to their book value because of falling house prices, lenders could crystallise their losses,” says Williams.
Williams also says a number of IMLA members are developing their arrears and repossessions management processes to help them work more closely with individual borrowers in difficulty.
In December 2007, former FSA head of retail markets Clive Briault said the FSA felt some lenders were consistently refusing to treat cases on an individual basis.
He said the regulator would launch a thematic study to see if there was a problem of non-compliance with its rules, set out in the mortgages conduct of business sourcebook (MCOB).
In February this year, the Financial Services Consumer Panel (FSCP) said it was concerned some homeowners could lose their homes because they are unaware of the FSA’s rules on repossession proceedings.
In the same month, the Council of Mortgage Lenders (CML) announced repossessions in Britain during 2007 reached 27,100, the highest level since 1999.
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Report to be written by TPR
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Some 2,000 consumers affected