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FCA orders review of mortgage arrears and forbearance procedures

  • 25/03/2013
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FCA orders review of mortgage arrears and forbearance procedures
The Financial Conduct Authority has described mortgage arrears and forbearance management as a ‘key area’ for the new body in 2013 and announced the launch of a thematic review.

The FCA said in its business plan that it would launch a review to look at the treatment mortgage borrowers receive when they are in some form of financial difficulty.

It said that the review would consider the arrears handling procedures and forbearance management of lenders.

This would include strategies on dealing with long-term arrears, new practices used by firms and whether consumers were treated fairly by such actions.

The FCA said that it would expect full co-operation from the industry: “Following previous thematic reviews, which led to a number of successful enforcement cases, we expect firms to be able to clearly demonstrate how they comply with our rules in this area, ensuring fair and appropriate outcomes for borrowers in arrears.”

The regulator also highlighted the issue in its risk outlook and said that in some cases lenders chose to ‘adopt strategies that support their own interests but may not be in the long-term interests of their consumers.’

It added: “The balance between the cost and benefits of forbearance for individual consumers are important considerations for to ensure they are in the long-term interest of consumers.”

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