It also pointed to potential difficulties for other borrowers next year when 1.4m short-term fixed-rate mortgages will need to be refinanced. The FSA requires firms to treat their customers fairly and have a written approach to dealing with customers in arrears. The FSA acknowledged that lenders would find it difficult to take a sympathetic approach to borrowers in the current environment. It is to inspect the approach of up to a dozen major lenders by the end of March and those which have breached the rules over arrears will face fines, public sanctions and could even be barred from conducting further business.
The FSA's approach contrasts with the US where Hank Paulson, Treasury secretary, is working on a plan that would set more uniform standards for helping troubled mortgage borrowers. The plan is designed in part to address complaints from mortgage lenders and servicers that they do not have the resources to rework mortgages on a case-by-case basis and need to apply a set of uniform standards to large groups of borrowers.