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New arrears rules on call recording

14 Dec 2010

A change to Mortgage Conduct of Business Rule 13.3.9 has been implemented by the FSA. Lenders and mortgage administration companies must record all telephone conversations between the firm and the customer “which discuss the sums due”.

The record should be kept for 3 years from the date of the call and should note the date and time of each call. There is a useful transitional provision allowing lenders until 25 December 2010 to comply with this new requirement.

There are some issues around the extent to which these changes apply to firms of solicitors, field agents and asset managers. FSA regulated firms should consider the impact of these changes on all third party suppliers.

FSA Consultations

CP10/16 – Arrears Fees and charges

The FSA is consulting on proposed new rules relating to arrears fees and charges as part of this consultation. The consultation period ends on 16 November 2010 and any new rules are expected to be implemented in 2011.

Headline issues include the need for mortgage lenders to objectively justify and demonstrate to the FSA, where required, that their arrears fees and charges are a reasonable estimate of the cost of the additional administration arising from a customer falling into arrears.

New rules are also proposed in relation to charges arising from missed payments, such as direct debits. It is proposed that, in any one month, the lender should only charge for a maximum of 2 payment requests. If payments are missed by the customer over 2 consecutive months, the lender will be required to reconsider whether the payment method used remains suitable for the customer. During this consideration period, the lender will not be allowed to levy any further charges if the customer misses any further payments.

Telephone

CP10/21 – Complaint handling

The FSA is consulting on changes to the rules relating to complaint handling by FSA regulated businesses. Amongst the changes being proposed are:

  • An increase in the compensation that the Financial Ombudsman Scheme (FOS) may award from £100,000 to £150,000.
  • Removal of the current 2-stage process that firms can adopt to handle complaints. This is likely to result in firms having to consider all complaints received in greater detail to ensure all aspects of customers’ complaints are reviewed before issuing the firm’s formal response.
  • A requirement that firms carry out proper root cause analysis and follow through on remedying any systemic or recurrent issues resulting in complaints.
  • Guidance for firms to ensure that they consider decisions issued under the FOS and learn from previous complaints/outcomes.

For further information or assistance contact Phil Broadhurst on 0191 232 8345 0r email phil.broadhurst@hay-kilner.co.uk.