As a part of its ongoing review of secured and homeowner loan companies treating customers fairly, particularly during the current economic down turn, the financial regulator, the Financial Services Authority (FSA), has issued its latest report and has found continued shortcomings amongst a number of loan companies and third party administrators in the specialist lending areas, such as self certification and bad credit loans, when it comes to their handling of customers in an arrears situation on their loan, or facing repossession, despite warnings being issued to all lending institutions at the end of last year.

Currently four specialist loan companies have been subject to enforcement by the FSA and several more are currently being investigated, for failing to meet the FSA’s guidelines on treating customers fairly and having correct and suitable procedures for handling loan arrears.

The most recent companies to be investigated have all offered bad credit loans in the past and are currently not offering any new loans to customers. The FSA found that these lenders, along with the third party administrators who are appointed by the loan company to deal with those customers in arrears, were not meeting the necessary standards with particular areas of concern being: focusing on recovery of arrears rather than assessing the customers needs, taking court action too quickly, applying large charges and penalties to loans in arrears and companies not monitoring third party administrators adequately.

Lesley Titcomb of the FSA said “In current market conditions, with our data showing more people struggling to meet their mortgage payments, it is vital that firms treat customers who get into arrears fairly. It is unacceptable that some firms are applying fees unfairly and pushing customers towards repossession without considering alternatives. The steps we are announcing today demonstrate that proper handling of arrears is still a high priority for us and will continue to be so until the necessary progress has been made.”