AMI: Fair treatment of customers in arrears

The Association of Mortgage Intermediaries (AMI) has responded to the Financial Services Authority's (FSA) call for mortgage lenders to treat customers who are facing arrears and repossessions fairly.

Andrew Strange, Policy Director AMI, commented: "We are supportive of the FSA's call to all lenders to ensure that consumers facing arrears are treated fairly. We agree that repossession should be used only as a last resort. We request that lenders should consider all options such as waiving fees when temporarily changing those in difficulty to interest-only or where a customer has fallen into difficulty, considering a payment holiday or reduced payments over a fixed term. It might be preferable to extend the term of the home loan where appropriate.
"The FSA states that while arrears remain low, they are increasing. But AMI does not believe that the increase in arrears will exceeded previously published industry forecasts.

"We urge lenders to work closely with intermediaries when a client is facing difficulty, ensuring that clients are able to access the correct advice for their individual circumstances. During difficult periods in the market, consumers need advice more than ever. Intermediaries can play an important role in helping consumers manage their debts.

"We will continue to work with the FSA and lenders to ensure the best possible outcomes for consumers and we will build on the FSA's good practice notes for our members.

"The Government may wish to consider enhancing the Income Support for Mortgage Interest (ISMI) system, the state benefit system to assist homeowners in arrears. The system currently provides less support and value than it did during previous housing market downturns of the early 1990's, with longer waiting periods and a more realistic maximum loan amount."