The FSA has issued a warning letter to all mortgage lenders and mortgage administrators advising them to get their houses in order, so to speak, over possession actions and arrears management. This is in line with the rather underdeveloped (publicly at least), but important, FSA regulations on Treating Customers Fairly (which is more like a principle-based agenda than regulation) as well as the recent statement by Darling (discussed here) and the pre-action protocol (discussed here). The letter is wonderfully worded, the meat of which is
… we expect that your firm would want to review its own policies and procedures, to ensure they are compatible with both MCOB and our wider Treating Customers Fairly (‘TCF’) requirements. In particular, we expect Senior Management will want to take the following actions:
• critically review current arrears policy;
• critically review current management practices and procedures; and
• assess whether, in practice, borrowers in arrears are being treated fairly by initiating a review of a sample of cases to assess whether the FSA’s requirements are being met. You will be aware that since March 2008 all firms are expected by the FSA to have appropriate management information or measures in place to test whether they are treating their customers fairly …
But there is also a threat that if they don’t follow that expectation, the FSA will take enforcement action.
[Edit: Radio 4’s File on Four programme on 30.11.08 had an interesting take on banks’ current approaches including an interview with Derek McConnell of SouthWest Law and Defending Possession Proceedings fame, in which he calls for a review of the law.]
‘In such a challenging operating environment, it is particularly important for senior management to ensure the fair treatment of customers, including when they go into arrears.’
In other words ‘Look you know we were happy to let you make a killing but now its all gone tits up could you return the favour and at least pretend to care about those people we’ve stuffed otherwise they might realise just what a lot of useless overpaid bureaucrats we are.’
It is a shame the ‘operating environment’ should affect the importance of giving all customers fair treatment.