To build on the progress so far, the FCA has challenged firms to do more to deliver consistently good outcomes for borrowers. The FCA reiterated the importance of firms making decisions that take account of the specific personal and financial circumstances of borrowers – and reminded firms to deal sensitively with borrowers who have particular vulnerabilities.
The FCA’s review is published in the context of an extended period of historically low interest rates. The regulator has asked lenders to take action to identify customers susceptible to arrears if interest rates rise and have appropriate strategies to treat them fairly.
Clive Adamson, director of supervision at the FCA said:
“Since we last looked at arrears management we have been pleased by the progress that firms have made. However, there is still work to do. Lenders need to treat customers in financial difficulty fairly. We want firms to take further action to strengthen their arrears management practices and invest in their systems and people to make sure that they get this right.
“We are already working with firms and trade bodies to help them embed a culture centred on delivering the best outcome for customers based on their specific circumstances.”
Paul Broadhead, Head of Mortgage Policy at the BSA commented:
“Tick-box arrears management is dead and buried, and has been for some time. The right approach hinges on lenders listening to a borrower’s circumstances and providing the most appropriate solution from the options available. This human approach enables lenders to respond to an individual’s needs but is grounded in a framework that ensures fair treatment across the board.
“Arrears at building societies are well under two-thirds of the level in the market as a whole reflecting their more personalised approach. However, societies recognise that every case of financial hardship represents a personal tragedy and the focus on delivering good and appropriate customer outcomes remains front of mind.”
