The Council of Mortgage Lenders (CML) has published new guidance to help lenders deal with mortgage arrears and possessions while complying with both the FSA’s detailed mortgage conduct of business rules and its principles for treating customers fairly (TCF).

The newly published guidance replaces an earlier document advising on requirements, which the CML produced in October 2008.

The guidance has been published to try to draw together in a single document a composite summary of requirements for lenders on mortgage arrears and possessions emerging from a number of different sources.

It seeks to set out what lenders need to cover in their arrears management policies. This includes the prudential requirements a lender should consider when extending forbearance to borrowers in arrears. In its prudential guidance, the FSA recommends that firms’ policies should be more joined-up across different teams and management functions.

The CML is urging lenders to re-assess arrears management policies and involve in the process not just collections and litigation managers, but those working in credit risk, finance and internal audit functions, as well.