TCF and Mortgage Pre-Action Protocol required a higher level of interaction with customers, and outdated software systems were unable to cope with the demands of the changing marketplace, it said.
Phoebus Software is campaigning for the FSA to raise servicing standards in the industry, making it necessary for all lenders to show categorically they are treating customers fairly.
Paul Hunt, managing director of Phoebus Software, said: "A large proportion of the mortgage market still operates on legacy IT systems – some now several decades old.
"It’s no surprise lenders and servicers aren’t able to implement new TCF compliant collections strategies using those IT platforms.
"But it shouldn’t be allowed to continue – the mortgage market is a very different beast now than it was even just two years ago.
"If the FSA is serious about getting TCF ingrained in lenders and servicers, they have to be tough on the systems they use. We need a co-ordinated effort in the industry to invest in improving the mortgage market and the way all lenders and servicers operate. The longer we ignore it, the more borrowers suffer."
With house prices falling and unemployment on the rise, lenders and servicers cannot afford to hide behind benign market conditions. Aside from the commercial reasons for improving collections strategies, TCF is a growing concern for all lenders. But too many borrowers continue to be treated in the same old fashion.
Phoebus Software said if the FSA was serious about getting lenders and servicers to be TCF compliant in this market, they must address the appalling lack of investment in technology to support TCF collections.
Hunt said: "There’s a misconception that lenders and servicers can’t afford the up-front cost of improving or just updating their IT platforms. Phoebus runs a ‘pay as you go’ system so we help lenders to grow their servicing as they grow, and can afford it.
"It’s vital that the industry and the FSA address lenders and servicers’ inability to treat customers fairly. Legacy systems are for a legacy mortgage market. We have a chance to improve the mortgage market – we should be grabbing it now."
Have your say on this story using the comment section below