There have been a few stories in the media recently, telling of borrowers that have fallen victim to the unsavoury practices of some lenders. The most recent of these stories regards a mortgage lender who has been fined almost £3m by the Financial Services Authority for maltreatment of customers who had fallen into arrears with their loan repayment. Not only this, the same lending organisation has been ordered to repay almost £8m, plus interest, to 46,000 of its borrowers. The Financial Services Authority, the organization charged with monitoring and regulating the lending market, found that the lender was too quick to press for repossession of their borrowers assets. They also felt that the charges levied against borrowers who had fallen into arrears with repayments were inordinately high.
The vulnerable position of borrowers who find themselves unable to meet repayments leaves them open to a degree of exploitation from their lender. This position of power on the lender’s part can result in the pressing of disproportionate fees and charges. Essentially, the moral of the story should be that you do not enter into a contract which hinges on a repayment schedule that you cannot service. Of course, people’s circumstances can change though, particularly in the current, unpredictable financial environment. Never assume that findings of this nature will come to your rescue in adverse circumstances. As soon as you find yourself in financial difficulty, you must talk to your creditors and get some advice from a specialist debt advisor.
It is important that you fully investigate the company that you intend to borrow from. Make sure that you read all of the small print; don’t be sucked in by those advertised introductory rates. A quick search of the internet can provide some excellent word-of–mouth insights into a company’s customer service history. In this case, the Financial Services Authority examined the firm’s lending practices between 2004 and 2008. The investigation discovered that the additional charges for dealing with people in arrears were deemed to be excessive. Also, they found that in many cases, repossession proceedings had begun before other alternatives had been considered. Part of this may have been down to the staff that, it was discovered, had not had adequate training in management of arrears cases and the proper procedure for repossessions.
Although the case was investigated and refunds were made, it must again be underlined that this is not an easy way out of your debts. Indeed, there will be many other cases where this does not happen. Even in this case, we have to wonder why so much time is taken up with the enforcement process. The Financial Services Authority did know about these problems by mid 2008 but the case has only been recently settled. This is the largest fine so far levied by the Financial Services Authority against a mortgage lender and they are determined that it be taken as a statement of intent against mortgage lenders and third party administrators that are not acting in the best interests of their customers.
The Financial Services Authority revealed that they had received 1,510,000 complaints from the public between January and the end of June 2009 about the actions of some financial services firms. So the message is clear: make sure that you do your research, don’t be suckered in with introductory rates that seem too good to be true and select a lender that has an impeccable service record and a longstanding reputation. Talk to a specialist debt advisor at Harrington Brooks, which is one of the longest established financial practices in the UK. Go online to use their free debt wizard or give them a call on 0800 048 1764.