According to the Council of Mortgage Lenders (CML), the recently published Citizens Advice Bureau (CAB) report, ‘Set up to Fail’, is too simplistic in its criticisms of the lending industry.

CAB alleged that lenders default too quickly to court action but CML believes that the vast majority of mortgage customers receive a high level of help and care from lenders if they fall into difficulties in accordance with the rules set out by the Financial Services Authority (FSA). It requires lenders to seek possession only where all other reasonable attempts to resolve the position have failed. CML thinks that CAB’s evidence is based on a very skewed sample of borrowers.

CML is keen to point out that overall the level of mortgage arrears and possessions in the UK mortgage market are extremely small. The CML forecast of 30,000 first-charge possessions this year is in the context of 11.8m mortgaged households, and the individual case studies cited in the report are just a tiny fraction of UK borrowers.

However, CML agreed that there is a case for FSA regulation, that at present only covers first mortgages, to apply across both first charge mortgages and other secured loans. Many of the cases in the report relate to second charge lending, which is not regulated by the FSA.

Michael Coogan, CML director general, said: “CAB has taken a sensationalist tone in this report. In fact, sub-prime mortgages give people a way to rehabilitate their finances and are important in a financially inclusive mortgage market.

“This is a pity, as we agree with many of the underlying policy recommendations, particularly about the need for Government to improve the woefully inadequate public safety net for home-owners who fall into difficulties. It is vital to recognise that the overwhelming majority of mortgage borrowers are meeting their payments in full and on time.”