Industry Challenges for Mortgage Lenders

The FCA's Thematic Review into mortgage lending highlighted a number of areas that lenders need to be wary of as follows:

• Incomplete record keeping – insufficient customer case files resulting in repeat requests for information
• Inconsistent handling of vulnerable customers – not identifying and assisting individuals in difficult financial circumstances
• Inadequate reviewing of arrangements – not engaging in proactive communication with customers to establish suitability of payments
• Inaccurate communications –  not putting in place processes to review correspondence to ensure it contains the right information
• Lack of consideration of other options – issuing repeat requests for payment instead of offering other options for the repayment of arrears
• Narrow quality assurance processes – viewing calls in isolation rather than as part of a customer profile resulting in a fragmented picture of the customer
• Barriers to effective engagement – lengthy forms for the assessment of income, expenditure and individual vulnerabilities which the borrower is expected to complete without assistance from the lender

The customer-centric approach these points encourage also enables lenders to take a more pragmatic approach to affordability criteria, the stringent application of which has in some cases resulted in the creation of Mortgage Prisoners who could not move their mortgages to more affordable options. Lenders are encouraged to take an open and communicative approach to engaging with customers and fully embed the FCA's Treating Customers Fairly principles into their day to day processes.