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"Lenders warned to prepare themselves for worsening credit conditions"

By admin | January 5th, 2008 | General

Lenders across the UK have been warned by the financial regulator the Financial Services Authority to prepare themselves for a difficult year ahead in terms of credit conditions, and to take appropriate steps to protect themselves, including reviewing strategies wherever necessary. Officials from the FSA stated that lenders may need to look at ways to tighten up on lending in order to soften the effects of the credit crunch, which is set to get worse according to many experts.

Lenders have also been warned to stop taking a ‘blanket approach’ to people that are experiencing difficulties when it comes to their mortgage repayments. With credit conditions the way that they are, coupled with higher interest rates, many homeowners have struggled to meet their mortgage repayments, and this has seen the levels of repossessions in the UK rocket over recent months, with lenders quickly taking action when borrowers fall into arrears.

One FSA official stated: “A fairly consistent picture is emerging of some lenders … appearing to be unwilling to consider cases on an individual basis, unwilling to agree a tailored solution to the borrowers’ individual circumstances and apparently adopting a one-size-fits-all approach to arrears recovery.”

The FSA also confirmed that next year would see the agency undertaking a review of major lenders with regards to this issue, and lenders that are found to be breaching regulations in relation to arrears cases can expect serious penalties. Sensitivity over arrears is now more important than ever given the number of people due to come of cheap fixed rate deals, state FSA officials. Serious breaches over this issue could even result in the lender being banned from conducting business altogether.

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