Mortgage lenders are failing to give vulnerable borrowers in arrears enough support, FCA finds

6 December 2018

Mortgage lenders are failing to give vulnerable borrowers in mortgage arrears the level of support they need, the financial regulator has found.

In its thematic review of long-term mortgage arrears published today, the Financial Conduct Authority says that customers in long-term financial difficulty were generally treated well by lenders.

However, it found there was some inconsistencies in firms’ arrears management practices that could result in a poor customer experience and have the “potential to cause harm”.

The regulator says some customers did not receive the appropriate level of support as their vulnerabilities were not identified.

In other failings, customers also had to complete complicated forms for income and expenditure on their own.

Gemma Harle, managing director of Intrinsic mortgage network, part of Quilter, warns that vulnerable borrowers could “spiral further and further into a debt vortex” if lenders failed to help them.

She says: “Customers with long-term mortgage arrears need to be treated as vulnerable. The industry needs to come together and focus on how to improve its approach to those with long-term mortgage arrears and give these customers the best chance of getting back on track with their payments."

Ms Harle adds: “However, lenders should treat the illness rather than the symptoms and need to do more to identify and engage customers that are at risk of falling behind on their payments so they can nip the problem in the bud.”

The FCA also found that some firms held incomplete records on borrowers, gave inaccurate information to customers and did not consider alternative repayment options for arrears.

Interest rates are currently low so borrowers in arrears are not seeing their debt soar. However, the FCA says it has seen “isolated instances” of borrowers on high interest rates that have been unable to recover from their arrears position and their mortgage debt has continued to increase.

The FCA is urging borrowers in mortgage arrears to contact their lender to discuss the options available to them.

Jonathan Davidson, executive director of supervision at the FCA, says: “We know that many customers remain hesitant to contact their lender to discuss their mortgage arrears for a variety of reasons. We encourage customers to talk to their lender as early as possible as this may give them more time and options when it comes to the steps they can take.”


In reply to by anonymous_stub (not verified)

Individuals who spend more than they earn and then get into mortgage difficulties need to be penalised, NOT helped! I had to give up work in my forties due to ill health and still managed to pay my mortgage, when interest rates were 15% and no help was given to me. People need to learn there are consequences for spending more than they earn and living beyond there means! Seems today those individuals are get all the help to write ther debts.The finacial services industry need to have complete change in attitude and approach. I do see why those people who are thrify get penalised every time when finanial institutions give savers miserable interest rates. It is time for change when savers are rewarded and borrowers made to pay more!!!

In reply to by anonymous_stub (not verified)

Forget it, they should study how to get the best pension not expect to be carried through everything. Milleniels and snowflakes find everything stressful unless it's holidays, gap years and wasting their money then claiming they are poorly treat. Why don't their parents teach them about such things.

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