The purpose of new rules to be introduced by the Financial Services Authority (FSA) will be to help people having difficulty in making their mortgage payments. The FSA said that lenders must treat them fairly, and that all mortgage advisers should be approved as “fit and proper”.
In the new rules, the FSA has insisted that monthly charges should not be applied where an arrears repayment agreement is already in place, and that any payments made are allocated to missed monthly payments rather than arrears. Critically, it said that repossession should always be the last resort.
There will also be changes to “sale and rent back” arrangements, coming into force on 30 June 2010.
Lesley Titcomb at the FSA said that sale and rent back was used by people keen to remain in their homes. She told the BBC: “With cases of vulnerable homeowners evicted from their homes after 6-12 months after selling to unscrupulous sale and rent back companies, tighter rules were vital.”
Grant Shapps, Housing Minister, said support schemes for struggling home buyers were under review. “These tougher rules from the FSA will mean fairer treatment for struggling homeowners, and will ensure that lenders must exhaust every possible option to help before taking repossession action,” he commented.
Citizens Advice welcomed the changes and said that many customers had complained about large fees on arrears with no explanation of how they had been arrived at.
On behalf of the Council of Mortgage Lenders, director general Michael Coogan thought the FSA’s changes were helpful, and said: “While we may feel somewhat harshly treated in relation to the treatment of lenders under the approved persons’ regime, we do recognise that the FSA is trying to make sure there is a clean game.”
