CML welcomes financial capability action plan

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Monday, 07, Jul 2008 12:00

The CML welcomes today’s launch by the Treasury and the Financial Services Authority of the financial capability action plan, designed to provide more support for people to tackle their money concerns.

The measures announced today will dovetail with the active steps that lenders are taking to make sure they are doing as much as they can to help borrowers manage rising mortgage costs.

Lenders have already committed to contact borrowers coming to the end of existing mortgage deals in good time to help them plan ahead for higher borrowing costs and their impact on household budgets. And lenders have agreed to the concept of a ‘pre-action protocol’ before court action – essentially, a checklist of options that lenders will go through when dealing with customers in arrears. The aim of the ‘pre-action protocol’ is to reinforce the fact that repossessing the property remains the last resort, with court action only being pursued when all other measures to help the borrower have not succeeded.

However, household budgets are coming under pressure from a complex variety of sources, not just rising mortgage costs. Many home-owners have other credit commitments, and all households are feeling the effects of higher food and fuel costs.

The financial capability action plan is therefore particularly welcome because it brings together a number of different agencies and initiatives to help households deal with problems when their budgets are coming under pressure from such a complex range of sources.

The CML’s director general Michael Coogan said:

"Lenders and the government are both taking steps to try to make sure that people worried about their finances get access to good advice and are treated fairly.

"If you are worried about your mortgage, talk to your lender. Alternatively, talk to an advice agency or one of the consumer helplines designed to offer practical assistance. Most cases of difficulty can be resolved - and the earlier you take that difficult first step to make contact, the easier it is to prevent your financial difficulties from becoming worse."

NOTES TO EDITORS

1. The Council of Mortgage Lenders' members are banks, building societies and other lenders who together undertake around 98% of all residential mortgage lending in the UK. There are 11.8 million mortgages in the UK, with loans worth over £1.2 trillion.

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