Concerns over customer protection have been aired by the Financial Services Consumer Panel in response to the Financial Services Authority’s (FSA) first consultation paper on regulating mortgages.
The panel, which was formed by the FSA to report on its performance in meeting statutory objectives, claims that the consulatation paper does not go far enough to meet the standards needed to protect borrowers who are in mortgage arrears or the requirements for staff training and competence.
Colin Brown, chairman of the Financial Service Consumer Panel, said: “The FSA has done its best to construct an effective regime, a task made difficult by the Treasury leaving advice and intermediaries unregulated. We strongly support the FSA’s proposal to make lenders responsible for ensuring intermediaries give the right information to consumers.
“But in some areas the FSA could go further. For example, lenders often fail to treat borrowers in arrears in an even handed way. We would like to see rules in place that require lenders to give due weight to the rights of consumers when negotiating settlements and repayment periods.”
In addition to the call for lenders to treat consumers in arrears more fairly than at present, the panel has also called for the FSA to establish specific training and competence requirements for supervisors of administrative staff in authorised firms dealing with mortgages.
In an official response to the consultation paper, the panel added: “Mortgages are the largest transactions undertaken by many consumers and there is potential for substantial detriment from poor quality administration. In his most recent report, the Banking Ombudsman noted that one of the principal areas of complaint related to banks’ incorrect calculations of repayment amounts.”