During the initial phase of the pandemic, payment holidays
provided mortgage borrowers with immediate and temporary support.
They have helped millions of consumers through the immediate
impacts of the current emergency and helped firms provide support
at unprecedented scale.
The majority of customers who have had a payment holiday are
expected to resume full repayment. However, many will remain in
financial difficulty.
The FCA is today publishing additional draft guidance for firms,
to ensure that consumers – both those who have benefitted from
payment deferrals under the current guidance who continue to face
financial difficulties, as well as those whose financial
situation may be newly affected by coronavirus after the current
guidance ends - get the support they need in these extraordinary
times. Some consumers will continue to be impacted by coronavirus
while others will be newly impacted in the coming months.
Consumers in these situations will benefit from firms providing
them with the tailored support that is normally expected, which
also needs to reflect the uncertainties and challenges that many
customers will face in the coming months.
The current guidance will continue to provide support for those
impacted by coronavirus until 31 October 2020 – with consumers
able to take a first or second three-month payment deferral. The
FCA expects the current guidance to expire on 31 October, but
will keep this under review depending on how the wider situation
develops.
The draft guidance proposes that firms should consider the
appropriateness, and use, of a range of different short and
long-term support options to reflect the specific circumstances
of their customers. This could include extending the repayment
term or restructuring of the mortgage. Where consumers need
further short-term support, firms should offer arrangements for
no or reduced payments for a specified period to give customers
time to get back on track.
Christopher Woolard, Interim Chief Executive at the FCA, said:
“It is important that consumers who can afford to resume mortgage
payments should do so. However, we understand that borrowers
facing payment difficulties because of the pandemic will continue
to face uncertainty and may also experience temporary
interruptions in income. We are proposing that firms contact
their borrowers in good time before the end of a payment holiday,
and work with them to come up with a tailored plan to help get
them back on track. Firms should not take a ‘one size fits all’
approach.”
Under the proposed guidance, firms should prioritise giving
tailored support to borrowers who are at most risk of harm, or
who face the greatest financial difficulties.
Firms should also provide borrowers with the support they need in
managing their finances, including through self-help and money
guidance, and refer borrowers to debt advice if this meets their
needs and circumstances.
Where borrowers require further support from lenders, either at
the end of payment holidays under our guidance, or where they are
in need of support for the first time, this would be reflected on
credit files in accordance with normal reporting processes. This
will help to ensure that lenders have an accurate picture of
consumers’ financial circumstances and reduce the risk of
unaffordable lending. Firms should be clear about the credit file
implications of any forms of support offered to borrowers.
Stakeholders can make comments on this draft guidance by 5pm on
Tuesday 1 September 2020.
Notes to editors
- Read the guidance
consultation.
