Lenders warned by FSA
January 6, 2008
The UK’s financial regulator, the Financial Services Authority, has issued a warning to lenders stating that the credit crunch means that things will get increasingly difficult in months to come, and that lenders need to make sure that they do something to curb their lending and minimise on financial impact. Stating that the credit crisis could yet get worse the FSA stated that lenders need to have strategies in place and look at reducing lending.
The regulator has also urged lenders to give consumers time if they are experiencing difficulties with mortgage repayments in light of the financial turmoil. The FSA stated that repossession had “increased significantly, albeit from a very low base.” In a recent speech one official from the FSA stated that “lenders were taking a blanket approach to customers in difficulty.”
He also added: “A fairly consistent picture is emerging of some lenders … appearing to be unwilling to consider cases on an individual basis, unwilling to agree a tailored solution to the borrowers’ individual circumstances and apparently adopting a one-size-fits-all approach to arrears recovery.”
The FSA has also revealed that it plans to review the practices of a number of major lenders over the coming months, and those breaching regulations over arrears can expect to face serious penalties. According to reports some may even be banned from conducting business in the future depending on the seriousness of the breach.
Many more customers are set to face financial difficulties over coming months as a result of coming off cheap fixed rate mortgages, and lenders are going to have to ensure that they go by the book when it comes to consumers falling behind with their repayments.
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