FCA finalises mortgage payment shortfall guidance

FCA has finalised its guidance on the treatment of customers with mortgage payment shortfalls. The guidance addresses how firms should remediate for customer who may have suffered because of the way some firms calculate monthly payments. FCA made few changes following its consultation on the guidance, which effectively stops firms from using “automatic capitalisation” of shortfalls, which results in firms automatically calculating the payment shortfall balance over the remaining term of the mortgage while also treating them as immediately payable.  This can lead to a number of unfavourable outcomes for consumers, and FCA requires firms not only to put right this practice so it does not happen any more, but to remediate those who have suffered harm in line with the guidance.