The Financial Services Authority is the UK’s financial regulator, and part of its job is to protect consumers from unscrupulous actions by banks and financial institutions by ensuring that these institutions and properly and fairly regulated.

With the financial and economic climate in such a state consumers have needed the protection of the FSA more than ever before over the past couple of years, but a group of MPs has claimed that the agency has let consumers down and has failed to protect them from aggressive mortgage lenders in the ongoing difficult climate.

MPs on the Treasury Select Committee have accused the FSA of taking a far too leisurely approach to the soaring level of repossessions, and has stated that the agency has taken a lax approach when it comes to ensuring that consumers are being treated fairly by lenders, which has contributed to rising repossession levels.

The MPs said that at a time when so many homeowners were struggling with their finances many aggressive banks – including those which have been bailed out by taxpayers – have moved in and preyed on these people through actions such as charging extortionate fees and by taking repossession action.

Sub-prime lenders were identified as the worst offenders, and the MPs said that the FSA needed to step up to the mark and start protecting the public. One committee member said: “We suspect that the small number of cases being brought against lenders making excessive arrears charges are merely the tip of the  iceberg. This is why it is so important that lenders  are compelled to open up their books and justify their charges, while the FSA must be  prepared to take decisive action where it finds evidence of wrongdoing.”

He added that the committee was very concerned about what was going on, and about the lack of action that was being taken by authorities, and said: “The FSA and the OFT must get a grip on this problem and crack down on lenders who are breaking the rules and mistreating customers in arrears.”

He also said that in 2007 the FSA had indentified that fact that some banks were treating consumers unfairly with regards to mortgage arrears, but two years later the agency had taken action against just four such firms, indicated a very lax approach to the problem.

He stated: “The seemingly leisurely approach of the FSA in terms of completing its mortgage arrears review and enforcing possible breaches in the rules in the area of mortgage arrears is a matter of grave concern. We call upon the FSA to spell out clearly how it will improve its performance in terms of bringing miscreant firms to book.”

However, the FSA has naturally denied these claims and has said that it needs to look more closely at the situation before making any regulatory changes, with one spokesperson stating: “We take a robust position with firms as soon as we have evidence of wrongdoing and also to ensure borrowers are treated fairly throughout the lifetime of their mortgage.”

However, a committee member said: “It is clear the behaviour of some mortgage lenders towards vulnerable homeowners has been completely unacceptable – yet the FSA has failed to intervene effectively.”

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