Rules change to protect vulnerable home-owners

The City watchdog announced new rules yesterday to protect vulnerable consumers who are struggling to keep up with their mortgages.

The regulations aim to make sure people who are in mortgage arrears and those entering into sale-and-rent-back schemes are treated fairly.

Under the Financial Services Authority's new regime, mortgage lenders will not be allowed to levy monthly charges on customers once an agreement to repay the arrears has been set up.

Hide Ad
Hide Ad

Payments made by customers in financial difficulties must also be used to reduce their missed payments first, before they can go towards clearing any charges that have built up, while lenders must consider all options for borrowers and repossess their home only as a last resort.

Firms must also record all telephone calls relating to arrears and keep the records for three years.

The FSA also confirmed that new rules will be coming in to protect people considering a sale-and-rent-back scheme, where they sell their home and then rent it back again, from firms using aggressive sales methods or unfair tactics.

Firms in the sector will be banned from using exploitative advertising and high-pressure sales techniques, while they will no longer be able to use emotive terms, such as fast sale, mortgage rescue or cash quickly in promotional literature.

Customers will also be given a 14-day cooling-off period.