Independent banks see no need for Govt schemes

Lenders that have so far declined to take part in Homeowners Mortgage Support Scheme (HMSS) have defended their decision not to sign up to the proposal because of the strength of their existing procedures for helping borrowers in trouble.

Last week, six lenders announced that they would join the Government scheme, but Barclays, HSBC, Nationwide, Abbey and Alliance & Leicester have so far declined. The initiative is aimed at allowing people who temporarily lose income to defer some of their mortgage interest payments for up to two years, with shortfalls backed by a Government guarantee.

So far, National Australia Bank - which owns the Clydesdale and Yorkshire building society - and Cumberland Building Society are the only lenders participating in the scheme that are not under some form of Government control. Lloyds Banking Group -which owns Halifax and Bank of Scotland - Royal Bank of Scotland and Natwest have signed up, while Northern Rock and Bradford & Bingley are also on board.

Ray Boulger, senior technical manager at John Charcol, suggested that any scheme which helped people avoid repossession is 'clearly good news'.

He explained: "But any such scheme has to take account of a number of conflicting issues and the length of time it has taken the Government to agree terms with lenders, and then only with such a small number of lenders, most of whom are Government controlled, demonstrates the difficulty of putting together a viable scheme."

Fahim Antoniades, director of Quantum Money, said it was no surprise that the lenders who had not signed up were those who had a freer commercial will than the government-backed lenders.

Abbey told Mortgage Solutions that it offers similar levels of forbearance to those offered under the HMSS.

A spokesman for the lender commented: "This individualised approach has served us well and provides the best and most expedient solution for our customers. On this basis, our participation in the HMSS would be extremely limited."

Similarly, Nationwide said it had its own robust forbearance procedures in place, adding that the HMSS reflected the good practice and flexible procedures that it already had in place.