FCA enhances support for mortgage borrowers
The FCA has set out new proposals to enhance support for mortgage borrowers affected by Covid-19. The regulator sets out new proposals due to increasing restrictions announced in recent weeks.
The FCA is planning to extend the availability of payment deferrals to support borrowers experiencing payment difficulties.
This will mean that those who:
- have not yet had a payment deferral will be eligible for 2 payment deferrals of up to 6 months in total
- currently have an initial payment deferral, will be eligible for another payment deferral of up to 3 months
- have resumed repayments after an initial payment deferral will be eligible for another payment deferral of up to 3 months
Under the FCA’s proposals, borrowers would have until 31st January 2021 to request a payment deferral.
The FCA says it is working closely with trade bodies and lenders to implement enhanced measures as soon as possible. It is urging consumers not to contact their lender until the enhanced measures are in place.
The regulator has confirmed that a payment deferral under these proposals would not be reported as missed payments on a borrower’s credit file. However, it noted, “this does not mean that consumers’ ability to access credit will be unaffected in future, as lenders may take into account a range of information when making lending decisions”.
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The FCA is also proposing that no one will have home repossession without their agreement until after 31st January 2021.
Sheldon Mills, interim executive director of strategy and competition at the FCA, said:
“We are working with lenders to ensure enhanced support remains available to borrowers struggling financially following changes in the coronavirus situation across the UK.
“Tailored support will still be offered and remains the most appropriate option for many borrowers, but we are proposing to extend payment deferrals for additional support. We also want to make sure no one has their home repossessed during this time.
“It is in borrowers’ own long-term interest only to take a payment deferral when absolutely necessary. Those that are able to keep paying, should do so. This allows support to be targeted to those most in need.
“We are also asking borrowers not to contact their lender yet, and instead wait for further updates, including from their lenders, soon.”
The FCA is asking for comment on the proposals by 10 am on Thursday 5 November. The regulator will publish the final guidance as soon as possible after the comment period closes.
The FCA will continue to keep the support available to consumers under review.
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