The Financial Conduct Authority (FCA) has announced proposals to ensure that firms provide tailored support to mortgage borrowers who continue to face payment difficulties due to coronavirus.
The FCA has published a guidance consultation setting out further information for mortgage providers and COVID-19 affected borrowers.
The FCA’s proposals aim to support mortgage borrowers who have taken up payment deferrals and who continue to face financial difficulties. The proposals will also help those whose financial situation may now be affected by COVID-19 post lockdown.
The draft (in consultation until 1 September) proposes that providers should consider the use of a range of different short and long-term options to reflect the position of their customers who are still in difficulty. The options could include extending the repayment term or restructuring of the whole mortgage. Where borrowers need short-term support, providers should offer other arrangements such as continued payment holidays, or reduced payments, to give borrowers an opportunity to get back on their feet.
Where borrowers take up other arrangements from their lender, this will help to ensure that lenders have an accurate picture of consumers’ financial position and help reduce the risk of defaults and difficulties later. Providers should also be considerate of the impact these arrangements will have on credit files for borrowers.
The proposed guidance directs providers to prioritise tailored support to borrowers who are at most risk. Providers should also see if they can give borrowers support to manage their finances, including how to manage their money and if required direct them to debt advice
However, it should be noted that borrowers who can afford to make mortgage payments should carry on and not take a “one size fits all”, which was commented upon by Christopher Woolard, FCA Interim Chief Executive.
The FCA will keep this under review depending on how the wider situation develops.
Stakeholders can make comments on this draft guidance by 5pm on Tuesday 1 September 2020.
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This is not legal advice; it is intended to provide information of general interest about current legal issues.