Further regulation on mortgage arrears 'necessary'

24 May 2010

Written by Simon Whittaker.

More stringent regulation on the way that mortgage providers deal with their customers' arrears is needed, the Association of Mortgage Intermediaries (AMI) has said.

Responding to a Mortgage Market Review by the Financial Services Authority (FSA), the body has supported proposed measures to ensure the process of collecting arrears is made fair for borrowers.

Robert Sinclair, director of the AMI, commented that increasing transparency and reducing levels of fraud would help build consumer confidence.

However, he called for equal treatment across the board for intermediaries and providers, as well as clarity on each individual's responsibility to the customer.

Mr Sinclair admitted some concern at the potential damage the new regulations could do to the industry, adding that a retrospective investigation may not be suitable.

If the FSA's proposals are approved, lenders will be forbidden from applying monthly arrears charges if a customer has a repayment agreement in place, no early repayment penalties or interest on charges may be requested and repossessions would be made a last resort.

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