It’s always nice to hear about villains getting their just desserts and this week we have six example fraudulent mortgage brokers being struck off. The Financial Services Authority (FSA), the UK industry watchdog, found the six guilty of breaking fraud rule governing the mortgage industry and banned them from working with financial services.

The soon to be disbanded Financial Services Authority (FSA) has this week announced new rules to protect struggling mortgage borrowers who have fallen behind on their payments. The FSA has pledged to ensure they are treated fairly by lenders.

To this end, the FSA has announced new rules for staff and firms operating in the “sale and rent back” market aiming at approving all mortgage advisers as ‘fit and proper’ persons. This is a slightly Orwellian phrase but the intentions behind it are good.

There are several interesting new rules. Firstly, firms must not apply a monthly charge where a repayment agreement for arrears is already in place. This will remove one of the major irritants for people struggling with their repayments. Secondly, any payments made by customers must be first allocated to clearing the missed monthly payments, rather than to arrears charges. This will stop unscrupulous lenders effectively trapping people in debt through those arrears charges. Lastly, and what should be common sense to all involved, repossessions should always be the last resort.

As well as these rules, firms will be obliged to record all telephone calls with customers in arrears and keep them for three years.

There are also tighter controls governing “sale and rent back” arrangements, whereby a borrower who cannot keep up repayments opts to sell their home, but stay in it as a tenant.

From the 30^th June the FSA is also introducing measures which will ban high-pressure sales techniques, impose a two week cooling off period, ban cold-calling and leaflet drops and ensure the security of tenure for customers for at least five years.

Sale and rent back was often used by people desperate to stay in their homes. With cases of vulnerable homeowners evicted from their homes after 6-12 months after selling to unscrupulous sale and rent back companies, tighter rules were vital.

The consumer rights group, Citizens Advice, has received more than 100,000 enquires about lending arrears over the past year and welcomed the FSA’s changes, but they also said closer examination was needed of charges levied by some companies on customers in arrears.

It says some clients of its Wiltshire bureau had reported charges of £115 for each month they were in arrears with their mortgage with a sub-prime lender.

The Council of Mortgage Lenders (CML), whose members account for 94% of all mortgage lenders in the UK, said 46,000 homes were repossessed last year, the highest number since 1995.

It picked out the requirement for an adviser to be an “approved person” as an unnecessary additional cost on lenders. But, the CML conceded that overall the FSA’s changes were helpful.

There can be no doubt that these changes are a good thing for the UK mortgage market, but what is astounding is that it took the FSA so long to act. Some of these measures will only have been required because of the recent crisis but many, if not most, should have been in place long ago to ensure that borrowers were protected from greedy, ruthless lenders who prey on the poor and needy to make a quick buck.