The Financial Conduct Authority (FCA) is urging people to get in touch with their providers at the first sign of financial difficulty because reporting it early could provide more time to make a difference.
The FCA launched its review into how lenders managed customers struggling with repayments after it noticed cases where customers were behind on their mortgage payments had increased but repossessions had decreased.
It prompted the financial regulator to take a closer look at whether this leniency from lenders was proving detrimental to customers.
And while its investigation found no widespread harm to customers, it did note some ‘inconsistencies’ in lenders’ management of customers who were in long-term arrears.
Taking prompt action
Now, as well as asking lenders to make improvements, the FCA wants customers with financial difficulties or those who fear they may go into arrears to be aware of what action they should take.
Jonathan Davidson of the FCA said: “We know that many customers remain hesitant to contact their lender to discuss their mortgage arrears for a variety of reasons.
“We encourage customers to talk to their lender as early as possible as this may give them more time and options when it comes to the steps they can take.”
It issued the following advice to customers who are worried about making repayments.
- Speak to your mortgage provider at the first sign of financial difficulty, or a change in circumstances, so you can discuss your circumstances together and identify potential solutions.
- Do not delay or ignore the situation – speaking with your mortgage provider early may prevent the situation from worsening as they may be able to discuss a wider range of options. This may also give them more time to make a difference.
- Seek additional support and free, independent guidance from organisations such as the Money Advice Service.
Paul Broadhead, head of mortgages at the Building Societies Association, said building societies had focused their efforts on keeping customers with financial difficulties in their own homes and used repossession as a last resort.
He added: “We encourage anyone who is facing a financial squeeze to get in touch with their lender early. The sooner the conversation starts the more likely it is that a solution can be found.”
