FCA: Extended support for Mortgage Borrowers who face payment difficulties due to coronavirus

The Financial Conduct Authority (FCA)  has recently published further guidance for firms for those consumers who have  benefitted from payment deferrals under the current guidance who still face financial difficulties. The new measures mean firms will offer further short and longer-term support reflecting the circumstances of their customers or to extend the repayment term or restructuring of the mortgage.

For those consumers who need further short-term support, firms will be able to offer arrangements for no or reduced payments for a specified period to give customers time to get back on track. The FCA has confirmed that this additional guidance will come into force on 16 September 2020. Under the guidance, firms will prioritise support for borrowers who are at most risk of damage their business, or those who face the greatest financial difficulties. The FCA will also be monitoring firms to ensure borrowers are treated fair by having regard to their individual circumstances.

The measures also state that firms will be signposting borrowers to the support they need to manage their finances. This will include self-help and money guidance, or free debt advice from organisations. For those borrowers who have taken, or are currently taking, payment deferrals under the 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 2020. 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. The FCA’s current guidance published in June 2020 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 until this date. The June guidance is due to expire on 31 October and the FCA do not intend to extend this guidance.

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