On 22nd May, the FCA outlined its proposed additional guidance (following the original guidance on 20 March) for mortgage lenders, mortgage administrators, home purchase providers and home purchase administrators, in light of Covid-19.
The proposal outlines the options firms will be required to provide to customers coming to an end of a payment holiday, as well as those who are yet to request one.
As with other recent Covid-19 related guidance, firms have a small window to provide comments to the FCA – 5pm on Tuesday 26th May 2020.
The guidance doesn’t relate to other consumer credit products and the FCA has indicated that such guidance will also be updated shortly.
We have picked out some of the key considerations below:
- For customers yet to request a payment holiday, the time to apply for one would be extended until 31 October 2020.
- For those who are still experiencing temporary payment difficulties due to coronavirus, firms should continue to offer support, which could include extending a payment holiday by a further three months.
- At the end of a payment holiday, firms should contact their customers to find out if they can resume payments and if so, agree a plan on how the missed payments will be repaid.
- The current ban on repossessions of homes will be continued to 31 October 2020. This will ensure people are able to comply with the government’s policy to self-isolate if they need to.
- Payment holidays and partial payment holidays offered should not have a negative impact on credit files.
- The guidance would not prevent firms from providing more favourable forms of assistance to the customer, such as reducing or waiving interest.
- Firms should consider signposting customers towards sources of debt advice.
- Firms should be particularly aware of the needs of their vulnerable customers and consider how they engage with them including the use of digital channels to request payment holidays.
The new guidance will be kept under review and updated as necessary. Unless renewed or updated, the guidance will expire on 31 October 2020.