The Financial Services Authority (FSA) has said mortgage lenders should do more to deal with individual customers fairly.
People facing debt management issues or repossessions due to arrears are particularly emphasised in the review, as the number of people in that position is increasing.
The FSA has said firms should look at each case on an individual basis and use court action and repossessions only when alternatives are not viable.
Lesley Titcomb, director responsible for the mortgage sector, said: As our data shows in these current market conditions more people are struggling to meet their mortgage payments and it is vital that firms treat them fairly.
“Repossession has to be the last resort.”
Specialist firms were singled out for their dealings, with conduct including treating customers with a “one size fits all” approach, being too eager to go to court and operating lower standards of controls and systems for arrears handling.
The Council of Mortgage Lenders said it found the conclusions about specialist companies surprising and urged the FSA to work with lenders to meet requirements.
By Morwenna Kearns