Consultant Zone

Mortgage Arrears – time to focus on policies?

The recent UK Finance arrears and possessions conference highlighted several action points for lenders and servicers. The underlying message, which mirrors current regulator themes is clear; organisations should use the current benign arrears environment to “weatherproof” policies and procedures.

We were not surprised to hear the renewed focus. Although current arrears numbers are low and with a cursory glance the outlook appears positive, there are potential clouds on the horizon. Turbulence in the wider economy could quickly result in increasing arrears and possessions. As an example, an assessment of independent forecasts compiled by HM Treasury shows an upward trend in the official bank rates to more than 2% by 2022 and this coincides with ONS/Bank of England figures showing an explosion in total consumer credit lending to households and a rapid decline in savings ratios (the buffer that households rely on to navigate bumpy financial storms). Coupled with this, weaknesses in new lending figures has resulted in a rapid flight by many lenders up the credit risk curve.

Based on this outlook, it is not surprising there is a renewed regulatory focus on two key issues; 1) gaps between policies and procedures and the requirements of MCOB13 (‘Arrears, Payment Shortfalls and Repossessions’) and 2) compliance with SYSC 8 (‘Outsourcing Requirements’).

Rockstead has 10 years’ experience in writing arrears and collections policies and procedures and reviewing the performance of a wide range of lenders and servicers.
We are ideally placed to assist in several ways, including “weatherproofing” existing policies and procedures and third-party oversight.