Mortgage lenders have been told by the Financial Conduct Authority (FCA) that they are expected to continue offering support to borrowers who are in a difficult financial situation thanks to the coronavirus pandemic.
New guidance published by the FCA last week is in place for consumers who continue to be affected by the pandemic as well as those who may be newly affected once the current guidance ends. The FCA stated that firms will be expected to offer tailored support to borrowers that reflects the challenges that many will face over the coming months.
Back at the start of the pandemic, payment holidays were offered to borrowers as part of the Chancellor’s financial aid package, helping millions of borrowers through the immediate impacts of coronavirus. The majority of customers who took out a payment holiday are expected to resume full repayments in the autumn however the new guidance is in place for those who still find themselves in financial difficulty.
This current guidance will offer support until 31st October, with borrowers able to take out a first or second three-month payment deferral up to this date. The new guidance issued by the FCA last week suggests that following the end of the current support, firms should consider a range of short and long-term support options depending on the needs of the individual clients. Such support includes extending repayment terms or restructuring the mortgage itself. In order to give borrowers time to get back on track firms should continue to provide arrangements for no or reduced payments for a specified period.
The proposed new guidance suggests firms should prioritise borrowers who face the greatest financial difficulties and offer customers support to manage their finances including referrals to money guidance and debt advice if required.
The new guidance also offers reassurance for lenders that borrowers who require further support with repayments would see this reflected on their credit files ensuring lenders have an accurate picture of consumers financial circumstances and the risk that they may pose. Lenders are expected to be clear about the credit file implications of any support offered before finalising agreements with borrowers.