Lenders who deal with home loans have been given a fairness deadline, and have been told that they could face hefty fines if they fail to treat customers fairly when it comes to dealing with arrears on home loans. Lenders have been told that they must prove that customers that are in arrears or are facing repossession are being treated fairly and that they have to provide this proof by 31st of January.

In order to do this lenders will have to review their arrears policies and make changes according. These policies have already come under fire by the UK’s financial regulator, the Financial Services Authority.

Senior officials at all mortgage lenders and administrators have been contacted by the FSA and they have been told to review their arrears policies.

The FSA Retail Managing Director said: “Conditions in the mortgage market are difficult and it seems likely that these conditions will persist for sometime. In such a challenging operating environment it is particularly important for senior management to ensure the fair treatment of customers.”

Adrian Coles, director general of the Building Societies Association, said: “With arrears forecast to increase over 2009, it is essential that all lenders ensure that their arrears and repossession policies treat customers fairly. Building societies want their borrowers to remain in their homes if they have repayment difficulties, and genuinely view repossession as a last resort.”

FSA regulations relating to the treatment of customers that have arrears include ensuring that customers are given reasonable time to repay their arrears and to ensure that they are told about places where they can get advice and further assistance. A written policy has to be in place to show that lenders are making reasonable efforts to help those in arrears rather than rushing into repossession proceedings.

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