The FCA has today published details of its latest review into long term arrears and forbearance measures currently being used by mortgage lenders in the UK.
The report does point to some good practices being observed , including appropriate arrangements being set which take account of individual circumstances, offering of designated call handlers and application of end to end quality assurance.
It is reassuring to note that all of these are part of everyday business as usual at Ascent and that the regulator has given this its 'seal of approval'.
There were however some area of concern around on-going inconsistent practices with specific examples highlighted including -
- Incomplete record keeping: we saw examples where customer case file notes had insufficient information. This resulted in customers having to repeat their circumstances on multiple occasions and may lead to the customer being disengaged.
- Inconsistent handling of vulnerable customers: we observed instances where customers did not receive the appropriate level of support as their vulnerabilities were not identified.
- Lack of consideration of other options: we found examples where firms would repeatedly pursue arrangements to pay, when it may have been suitable for them to consider alternative options for the repayment of a customer’s arrears.
This sends both the legal sector and Lenders alike the clearest message yet that, where appropriate, it is absolutely the right thing to do to undertake the appropriate legal remedy to address customer arrears.
By taking adopting this approach, in the long term, the customer's equity position can be protected from unnecessary erosion and further indebtedness or shortfall liabilities can be avoided by taking the right action at the right time.
Firms must now also consider how they are approaching the identification of vulnerable customers ahead of litigation and consider whether their current practices are sufficient to meet this threshold. Our highly skilled team, supported by industry leading technology are best placed to help Lenders achieve this FCA requirement.
Ascent supports many Lenders in achieving this objective via our field services, acting as a pair of eyes and ears undertaking mortgage arrears and pre-eviction visits with customers who are unfortunately not meeting their current mortgage obligations.
We consider this to be the gold standard in being able to effectively identify any potential vulnerability and take into account all of the customer circumstances in a way not possible in branch or over the phone.
We recommend consideration of this service to all Lenders who currently only restore dialogue customers via a reconnection service as there is no way to guarantee in this approach that you have gathered the fullest picture of the customers circumstances without taking this step.
Even when contact is established or on-going with customer, the value from a face to face visit on behalf of a Lender should not be under estimated in being a tool for re-engagement with rehabilitation, evidencing repossession proceedings being a last resort and addressing customer vulnerabilities in the best possible way.
The FCA does remind firms however that repossession should be used as a last resort.
The primary aim of forbearance should be to enable the complete recovery of the mortgage through the full repayment of arrears . In circumstances where this primary aim cannot be achieved, the secondary aim would be to recover the customer into a sustainable terms position on their mortgage. Sustainable terms are defined as revised contractual terms where the mortgage can be fully serviced over its full life. Payment arrangements that are agreed with the customer should be reviewed regularly (eg every 3-6 months), with the aim of recovering the loan as soon as is reasonably possible.
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