On 21 May 2020, the FCA issued proposals to update its guidance of 20 March 2020 to mortgage lenders, mortgage administrators, home purchase providers and home purchase administrators where home owners are struggling to pay their mortgage due to the exceptional circumstances arising out of the COVID-19 pandemic.

If the proposals are confirmed, the FCA would expect:

  • Customers who can afford to return to full repayment should do so in their best interests – 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.
  • Anyone who continues to need help gets help – lenders should continue to support customers who have already had a payment holiday where they need further help. Firms are expected to engage with their customers and find out what they can re-pay and, for those who remain in temporary financial difficulty, offer further support. As part of this firms should consider a further three-month payment holiday.
  • Extending the time the scheme is available to people who may be impacted at a later date – customers that have not yet had a payment holiday and experiencing financial difficulty will be able to request one until 31 October 2020.
  • Keeping a roof over people’s head during a public health crisis – 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 under the FCA guidance should not have a negative impact on credit files. However, consumers should remember that credit files are not the only source of information which lenders can use to assess creditworthiness.

The FCA welcomes comments on these proposals until 5pm on 26 May 2020 and expects to finalise the updated guidance shortly afterwards.

The updated guidance 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.