UK Mortgage Companies Guilty of Excessive Default Charges

  • 15 years ago
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London 08/08/2009- A report from the Treasury Select Committee is calling for harsher action against some mortgage companies by the Financial Services Authority. It asked for the body to  “raise its game” against companies that are not treating consumers fairly. The FSA was not naming and shaming those lenders that were making excessive charges against people who have fallen into arrears
 
City experts predict that with rising unemployment mortgage arrears could become a significant problem with predications of  400,000′ in default by 2011 with 3.5m unemployed. The prediction comes after Lloyds Banking Group revealed a fifth of its customers are now in negative equity. Britain’s biggest High Street bank also said 83,153 customers were behind with their repayments at the end of June – up 26 per cent from the end of 2008. 
 
The latest budget saw Chancellor of the Exchequer, Alistair Darling, pumping £50billion an initiative to guarantee any mortgage-backed securities
The group of MPs found that lenders were making charges over and above their administrative costs, some lenders were charging £35 for an arrears warning letter and £150 for a debt councillor to visit a defaulters home.
 
The FSA at this time does not name and shame the mortgage companies who have been found carrying out these practices. This lack of action seemed to put the regulator on the side of the lenders and not in the interest of consumers.
John McFall, chairman of the committee, said: “We suspect that the small number of cases being brought against lenders making excessive arrears charges are merely the tip of the iceberg.

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