FSA: Repossession should be "last resort"

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FSA: Repossession should be "last resort"

Wed 6th Aug 2008

The Financial Services Authority has called upon mortgage lenders to be flexible in handling arrears and to use repossession only as a "last resort".

Its call came after new research by the financial watchdog found that the number of borrowers facing arrears and repossessions is increasing, though still historically low.

Specialist lenders were found to be taking a "one size fits all" approach to arrears without considering individual circumstances and turning to courts too quickly.

Lenders in general were found not to be offering as many options or as much consideration for circumstances as they could do.

Lesley Titcomb, FSA director for mortgages, said it was "vital" for firms to be fair, "Repossession has to be a last resort."

Sue Edwards, head of consumer policy at Citizens Advice, echoed Ms Titcomb's sentiments and said the organisation had handled 57,000 problems with mortgages and secured loan arrears in the financial year 2006-7.

She urged the government to start a "mortgage pre-action protocol" to ensure repossession was taken only as a last resort and for lenders to be fair and consider alternatives.

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