The Financial Conduct Authority (FCA) has outlined the support mortgage borrowers will receive if they continue to face payment difficulties due to coronavirus.
The regulator has published additional guidance for firms, to ensure that consumers who have benefitted from payment deferrals under the current guidance who still face financial difficulties, as well as those whose financial situation may be newly affected by coronavirus after the current guidance ends, continue to get the support they need.
The measures mean firms will offer further short and longer-term support reflecting the circumstances of their customers. This could include extending the repayment term or restructuring of the mortgage. Where consumers need further short-term support, firms can continue to offer arrangements for no or reduced payments for a specified period to give customers time to get back on track. This additional guidance will come into force on 16 September 2020.
Christopher Woolard, interim chief executive at the FCA, said: “Some consumers will continue to be impacted by coronavirus in the coming months, or be impacted for the first time. Consumers in these situations will benefit from firms providing them with tailored support.
“However, it is very important that consumers who can afford to resume mortgage payments should do so for their own long-term interests and so that help can be targeted at those most in need.”
David Thomas, chair of the Society of Mortgage Professionals, added: “As we move from lockdown to social distancing, there will continue to be significant upheaval for most sectors of the economy. Some changes in individual circumstances will be temporary, while others will be longer term.
“It makes sense, therefore, that the guidelines that were drawn up for a lockdown situation should be changed. People who can resume payments should do so, to avoid building up interest unnecessarily, while people who continue to need support should be given as much help as possible. The new FCA guidance is well-positioned to achieve this.”
Under the guidance, firms will prioritise support for borrowers who are at most risk of harm, or who face the greatest financial difficulties. The regulator said the new guidance reinforces the need for firms to deliver outcomes that are right for individual borrowers rather than adopting “one size fits all” solutions. The FCA will be monitoring firms to ensure borrowers are treated fairly having regard to their individual circumstances.
Firms will also signpost borrowers to the support they need in managing their finances, including through self-help and money guidance, or refer borrowers to organisations that can provide free debt advice if this meets their needs and circumstances.
Where borrowers have taken, or are taking, payment deferrals under our existing guidance and require further support from lenders these further arrangements can be reflected on credit files in accordance with normal reporting processes. This also applies to borrowers newly affected by coronavirus who receive support from their lender after 31 October. This will help to ensure that lenders have an accurate picture of consumers’ financial circumstances and reduce the risk of unaffordable lending. Firms are required to be clear about the credit file implications of any forms of support offered to borrowers.