CP10/2: Mortgage Market Review - Arrears and Approved Persons
http://www.fsa.gov.uk/pubs/cp/cp10_02.pdf
The Financial Services Authority (FSA) has today set out a package of measures that will help to ensure that mortgage holders in arrears are treated fairly and which reinforces the FSA’s tough stance in its battle against mortgage fraud.
The proposals strengthen existing rules on arrears handling - one of the urgent issues flagged in the Mortgage Market Review discussion paper last October.
This reflects other ongoing work carried out by the FSA, which uncovered high levels of consumer detriment particularly in the specialist lending sector.
The key arrears proposals:
New proposals will also mean all mortgage advisers and those who arrange non-advised sales will be individually accountable to the FSA, and need to demonstrate they are 'fit and proper' for their role.
Extending the approved person regime will also have significant benefits for consumers. The FSA made it clear through its review of the mortgage market that it wanted a strong, viable and clean marketplace and its requirement for mortgage advisers to prove they are fit and proper will help to remove dishonest individuals from the industry and to keep them out.
Lesley Titcomb, FSA director responsible for the mortgage sector, said:
"Today’s proposals underline the standards that firms must meet and will help to ensure that homeowners in financial difficulties are treated fairly. Lenders need to be in no doubt of their obligations to customers who fall behind with payments and must realise that such circumstances are not an opportunity to create further profits."
ends.
TO be CLEAR - this does not involve standard late payment charges (they have always had to be proportional to cost). it does involve arrears fees whilst in an arrangement to pay arrears. I SUGGEST people read this thread - GMAC RFC will pay up to £7.7m customer redress - Page 3 - Legal Beagles
2.4 The proposed changes to the Mortgages and Home Finance: Conduct of Business
sourcebook (MCOB) are:
• clarifying our existing requirements in respect of the continued application of
a monthly arrears charge where a customer has entered into an Arrangement
to Pay (AtP);
• converting MCOB 13 forbearance guidance into rules and introducing a reference to
the various government schemes in place to help borrowers in payment difficulties;
• clarifying our existing requirements in relation to the practice of charging Early
Repayment Charges (ERCs) on arrears fees and charges and the interest levied on
the arrears charges;
• adding a new rule to require telephone calls to form part of the arrears records
kept by firms and extending the overall record keeping period from twelve months
to three years; and
• clarifying our existing requirements that payments from customers be allocated
to clearing missed monthly payments, leaving charges to be paid later.
__________________
http://www.fsa.gov.uk/pubs/cp/cp10_02.pdf
The Financial Services Authority (FSA) has today set out a package of measures that will help to ensure that mortgage holders in arrears are treated fairly and which reinforces the FSA’s tough stance in its battle against mortgage fraud.
The proposals strengthen existing rules on arrears handling - one of the urgent issues flagged in the Mortgage Market Review discussion paper last October.
This reflects other ongoing work carried out by the FSA, which uncovered high levels of consumer detriment particularly in the specialist lending sector.
The key arrears proposals:
- Make plain that firms must not add early repayment charges on arrears charges and interest levied on those charges;
- Clarify that firms must not apply a monthly arrears charge where the firm and the customer have agreed an arrangement to repay the arrears;
- Compel firms to consider all options for borrowers. Repossessions should always be the last resort;
- Confirm that payments by customers in financial difficulties must first be allocated to clearing the missed monthly payments, rather than to arrears charges, which can be repaid later; and
- Oblige firms to record all arrears handling telephone calls and to keep all records for three years.
New proposals will also mean all mortgage advisers and those who arrange non-advised sales will be individually accountable to the FSA, and need to demonstrate they are 'fit and proper' for their role.
Extending the approved person regime will also have significant benefits for consumers. The FSA made it clear through its review of the mortgage market that it wanted a strong, viable and clean marketplace and its requirement for mortgage advisers to prove they are fit and proper will help to remove dishonest individuals from the industry and to keep them out.
Lesley Titcomb, FSA director responsible for the mortgage sector, said:
"Today’s proposals underline the standards that firms must meet and will help to ensure that homeowners in financial difficulties are treated fairly. Lenders need to be in no doubt of their obligations to customers who fall behind with payments and must realise that such circumstances are not an opportunity to create further profits."
ends.
TO be CLEAR - this does not involve standard late payment charges (they have always had to be proportional to cost). it does involve arrears fees whilst in an arrangement to pay arrears. I SUGGEST people read this thread - GMAC RFC will pay up to £7.7m customer redress - Page 3 - Legal Beagles
2.4 The proposed changes to the Mortgages and Home Finance: Conduct of Business
sourcebook (MCOB) are:
• clarifying our existing requirements in respect of the continued application of
a monthly arrears charge where a customer has entered into an Arrangement
to Pay (AtP);
• converting MCOB 13 forbearance guidance into rules and introducing a reference to
the various government schemes in place to help borrowers in payment difficulties;
• clarifying our existing requirements in relation to the practice of charging Early
Repayment Charges (ERCs) on arrears fees and charges and the interest levied on
the arrears charges;
• adding a new rule to require telephone calls to form part of the arrears records
kept by firms and extending the overall record keeping period from twelve months
to three years; and
• clarifying our existing requirements that payments from customers be allocated
to clearing missed monthly payments, leaving charges to be paid later.
__________________
Comment