Mortgage arrears penalty may be scrapped

Northern Rock and Bradford & Bingley, the government-backed lenders, may have to scrap fees levied on homeowners who are behind on their mortgage repayments, following accusations that they are unfair and ‘make a bad situation worse’ for overburdened households. Most lenders charge up to £55 a month after borrowers fall into arrears, and Northern Rock alone collects more than £1 million a month in arrears charges. The Financial Services Authority is reviewing mortgage arrears charges and will report its recommendations in May.