The Financial Conduct Authority has announced support for people who are struggling to pay for their mortgage due to Coronavirus.
The Financial Conduct Authority (FCA) has confirmed the support firms should give to mortgage customers who are either coming to the end of a payment holiday or who are yet to request one. The FCA also reminds people that if they can make their normal mortgage payments then they should.
The proposals that the FCA put forward in late May outlined the options that the firms will be required to provide to anybody who is coming to the end of a payment holiday. The time to apply for a payment holiday would also be extended until the end of October 2020. If you’re still experiencing difficulties due to Coronavirus then it is expected that firms should continue to offer you support.
The FCA expect that;
- Those who can afford to make full repayments should do so – It would be in a person’s best interests to return to making full repayments if they can do so. Firms should contact these people to find out if this is possible and if so, agree a plan on how any missed payments will be repaid.
- Anyone who continues to need help should get help – Lenders should continue to support those who have already taken a payment holiday but need further help. Firms will be expected to engage with people and find out what they can afford to repay. For those that do remain in financial difficulty the firms will be expected to offer further support. As part of this, firms should consider a further three-month holiday payment.
- Extending the time the scheme is available for people impacted at a later date – If you have not yet had a payment holiday but are experiencing financial difficulty, you should be able to request one until 31st October 2020.
- Keeping a roof over people’s heads during a public health crisis – The current ban on repossessions of homes will be continued to 31st October 2020 to ensure that you will be able to comply with the government’s policy of self isolation should you need too.
- Payment holidays and partial payments should not have a negative impact on credit files – Although you need to remember that credit files aren’t the only source of information which lenders can use to assess credit worthiness.
This guidance should not prevent firms from providing more favourable forms of assistance if this was appropriate. Such as reducing or waiving any interest charged.
The firms should also consider signposting their customers towards sources of debt advice. This information could be helpful if they are coming towards the end of a payment holiday and would be especially helpful for those people with pre-existing payment shortfalls or if they will be likely to be in longer term difficulty.
When a firm implements the guidance, they will need to be particularly aware of their customers who are vulnerable and consider the best way to engage with them. If someone is unable to use a firm’s online services, then the firm should make it easy for them to access alternatives.
This guidance only applies to mortgages. It doesn’t apply to other credit products as they will be covered by separate guidance will be updated in due course.