Mortgage lenders are sometimes failing to show sensitivity towards customers who have endured a personal crisis such as a bereavement and are struggling to keep up with their payments, the City regulator has found.
The Financial Conduct Authority (FCA) wants lenders to make sure they are treating their most vulnerable borrowers fairly and that front line staff are given enough flexibility to offer leniency when trying to help people to hang on to their home.
The regulator found evidence that circumstances which require particular care, such as bereavement, terminal illness or physical or mental health issues, were not always picked up on by staff or properly examined.
It said such cases “were not consistently identified or appropriately probed by front line staff in some firms, even when they were explicitly referred to by borrowers. Referrals to specialist teams were also missed or made late in the process.
“This resulted in firms failing to treat some customers sensitively and failing to provide the benefit of short-term leniency set out in their policies.”
The FCA said that the sensitivity failings were found in a few isolated cases but it wants to raise awareness of the problem across the industry.
Arrears management has improved since a similar probe around five years ago, but some “one size fits all” approaches mean lenders are missing chances to tailor solutions to individual customers’ needs, the FCA found. Staff now appear to have more time to talk through solutions to a customer’s circumstances than was found during the last review.
But customer records and diary notes were “insufficiently detailed” in more than one firm, which restricted the ability of call handlers to deal with borrowers’ cases.
There appeared to be pressure on some staff to move on to the next customer call before they could fully note down all the details for people with complex problems.
Clive Adamson, director of supervision at the FCA, said: “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.”
The Council of Mortgage Lenders (CML), which represents banks and building societies, welcomed the review.
CML head of policy Jackie Bennett said: “We have always urged any borrowers with repayment problems to talk to their lender at the earliest opportunity, and continue to do so.
“Most customers can get back on track following a temporary period of payment difficulty, and lenders will help them devise a plan to achieve this that is tailored to their individual circumstances.”
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