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2nd June 2020
FCA confirms support for customers who are struggling to pay their mortgage due to coronavirus
The Financial Coduct 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 is also reminding customers that if they can afford to resume payments, they should.
For customers still experiencing temporary payment difficulties due to coronavirus, firms will offer support, with options including a full or part payment holiday for a further three months. Customers yet to apply for a payment holiday have until 31st October 2020 to do so.
Christopher Woolard, Interim Chief Executive at the FCA, comments "The measures we have confirmed will mean anyone who needs to can get help from their lender, if they are still struggling to pay their mortgage due to coronavirus.
It is important that if a consumer can afford to re-start mortgage payments, it is in their best interests to do so. Customers should talk to their firm about the best option available for them."
The FCA has confirmed:
-Customers that have not yet had a payment holiday and who experience financial difficulty have until 31ST October 2020 to request one.
-The current ban on lender repossessions of homes will be continued to 31ST October 2020. This will ensure people are able to comply with the government’s policy to self-isolate if they need to.
-Firms will communicate with customers regarding what happens when their payment holiday ends. They should offer a range of options for how the missed payments will be repaid, if they are able to resume payments.
-Lenders will continue to support customers who have already had a payment holiday where they need further help. Firms should contact their customers to find out what they can re-pay and, for those who remain in temporary financial difficulty, offer further support, which will include the option of a further three-month full or part payment holiday.
-Payment holidays offered under this guidance will not have a negative impact on credit files. However, consumers should remember that lenders may use information obtained from other sources, such as bank account information, in their lending decisions.
Depending on the customer’s circumstances, firms may make them aware of self-help steps a customer may take or signpost customers towards sources of debt advice. This will be for anyone concerned about managing their money during coronavirus and wants to find out what steps to take to get back on track.
When implementing this guidance, firms should be particularly aware of the needs of their vulnerable customers and consider how they engage with them. For customers who aren’t able to use online services(such as digital channels), firms should make it easy for customers to access alternatives.
This guidance comes into force on 4 June 2020 and only applies to mortgages. It does not apply to consumer credit products which are covered by separate guidance which will be updated in due course.
In response to the FCA confirming support for customers who are struggling to pay their mortgage due to coronavirus, David Thomas, Chair of the Society of Mortgage Professionals, ADDED “Covid-19 has left many people in a very difficult situation financially, but many of them will be able to recover relatively quickly once the economy has adapted to social distancing. It makes sense for the FCA to clarify that these families should be given the option of a payment holiday, because it avoids huge stress and disruption.
The FCA is also right to stress that people should only take a payment holiday if they need one–payment holidays involve paying more interest in the long term, so if people can continue with mortgage payments and still avoid financial hardship, they should.”