Are you repaying your mortgage arrears twice?

Concerns have been raised that those in mortgage arrears may not be being treated fairly 

 
The Financial Conduct Authority has identified that some mortgage firms have included customers’ payment shortfalls when recalculating their monthly mortgage payments.
 
Mortgage repayments are occasionally modified, for example at the end of a fixed term when the interest rate changes, to make surer the debt is repaid fully at the end of the term. 
 
Effectively this means that firms are collecting the arrears over the remaining mortgage term through a higher monthly payment and continuing to pursue the debt through their normal collections processes, meaning that some customers may be repaying the shortfall twice. 
 
The FCA said in its regulation bulletin that they “consider this practice to be ‘automatic capitalisation’ of payment shortfalls and a likely breach of our rules. Even if inadvertent, this practice lacks transparency and can lead to poor customer outcomes.”
 
The review could mean that thousands of customers are due compensation. The organisation has urged customers to hold off on contacting their mortgage provider until the end of the consultation period, when firms will contact affected customers directly.
 
They added;
 
“We expect firms to take appropriate action to put this right, and ensure the practice ceases. We are consulting on guidance for a remediation framework.”