FSA will tighten arrears rules next year

The FSA is set to tighten its rules on how lenders deal with mortgage arrears and repossessions.

Speaking at the Council of Mortgage Lenders' (CML) conference today, Jon Pain said the industry needs to take steps to ensure customers are treated fairly.

Pain, managing director of supervision at the FSA, confirmed the regulator will be launching a full consultation on changes to its conduct of business rules on arrears handling in January 2010.

"We want lenders to get back to the basics of responsible lending and we will continue to push the industry where we find firms are not treating their customers fairly," he says.

Pain also stressed it was not the FSA's intention to reduce access to mortgages for the self-employed through stricter rules on income verification.

He says the regulator merely wishes to bring an end to people taking on unaffordable mortgages, or committing mortgage fraud. The FSA wants to work closely with firms to identify acceptable verification measures on which to assess affordability.

""Just as a house requires solid foundations to be long lasting, mortgages need to be based on a proper assessment of affordability if we are to have a sustainable market," adds Pain.