FCA says 750,000 mortgage customers could get compensation payout

[citizenB]

A potential blunder by lenders means thousands could be in line for compensation, the Financial Conduct Authority says.

 

 

 

Hundreds of thousands of mortgage customers could be in line for compensation.

 

The Financial Conduct Authority (FCA) said its work with an industry group had identified a "likely" breach of industry rules.

 

The watchdog said it believed lenders had been collecting arrears over the remaining mortgage term through a higher monthly payment while continuing to pursue the money as immediately payable through their collections processes.

 

It believes around 750,000 customers may be affected by the issue of lenders automatically lumping arrears balances in with customers' monthly mortgage payments.

 

 

http://news.sky.com/story/fca-says-750000-mortgage-customers-could-net-compensation-payout-10623570

 

I dont think this is or was a blunder - it was a deliberate action by the mortgage companies.

[harris1997]

Interesting information. Please can you explain what it actually means to a simpleton like me, or what it is that a company may have done. I do hope GE money falls into this category! Probably wishful thinking on my behalf!

[citizenB]

Interesting information. Please can you explain what it actually means to a simpleton like me, or what it is that a company may have done. I do hope GE money falls into this category! Probably wishful thinking on my behalf!

 

 

I will try to explain, although I find it quite confusing myself.

 

 

Say I had a mortgage with Grabitback bank - for whatever reason, I had arrears that went past their permitted arrears limit. I have offered to repay it a £x amount per month on top of my usual monthly payment. They say no - we want to capitalise the arrears.. "add it to the end of the mortgage" (which is essentially lending you more money).

 

 

You agree to this - so your monthly repayment SHOULD stay the same with no extra for the arrears.

 

 

However, the banks would capitalise the sums and still send the arrears amount to a debt collection agency - or even keep it in house to pursue you for something that you have already agreed to repay at the end of the original mortgage term !

 

 

Hope that makes sense.

[citizenB]

GE Money is a sub prime lender, so I am not sure whether or not they have been caught up in this - IMHO, they should be as they have lent money for a mortgage.

[harris1997]

Thank you CitizenB, yes a little clearer.....i think

 

I don't think i will fall under this as i did pay extra money for arrears on top of the normal installment but they did not capitalise.