Financial institutions e-briefing: secured recoveries litigation
In May 2013, the Financial Conduct Authority (FCA) consulted on guidance about dealing fairly with interest-only mortgage customers who risk being unable to repay their loan. The FCA has now considered the responses and on 29 August 2013 published finalised guidance (FG13/7), along with a summary of the feedback received.
The review of lenders’ strategies, policies and practices covered eight lenders (23 mortgage brands), representing approximately 40 per cent of the UK interest-only residential mortgage market (in other words, excluding buy-to-let mortgages). The FCA found that the industry is engaged with the interest-only maturity risk and that firms are generally trying to treat customers fairly, but are at different stages of engagement with the maturity risk.
The guidance sets out what the FCA expects firms to do to ensure the fair treatment of customers who are unable to repay the capital sum at the end of the term and to minimise the risk of non-repayment through early and effective consumer engagement over the mortgage term…
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