Some mortgage lenders in the UK are implementing higher Standard Variable Rates (SVR), requiring borrowers to repay their home loans in full for minor breaches, according to the Financial Services Authority (FSA).
FSA highlighted a raft of lender tactics, which it noted was detrimental to consumers, including poor treatment of borrowers in arrears.
Problems highlighted include mortgage lenders moving borrowers from their discounted initial rate deal to their SVR, for minor loan breaches.
In 2007, several UK lenders, including Chesham Building Society, National Australia Bank, Barclays and In Retirement Services, were forced to change unfair terms in their consumer contracts.
Meanwhile, despite lower than expected arrears levels, the FSA noted that several problems remain, especially from specialist lenders.
It said issues include uncertain customer information and fees not reflective of administration costs. It added that impaired credit lenders are more inclined to implement a “one size fits all” policy compared to mainstream lenders, moving swiftly to take possession without establishing borrowers’ individual circumstances.
“We have taken enforcement action against mortgage firms where we identified breaches in our rules or principles,” it said, adding that this area needs increased vigilance, especially if interest rates start to increase or the economic condition deteriorates further.