On 14 July 2023, the FCA announced a temporary forbearance on MCOB 7.6.28.R.
To support the Government’s Mortgage Charter, the FCA introduced changes to its rules enabling firms to allow mortgage borrowers to:
· Reduce their capital repayments for up to six months.
· Fully or partly reverse a term extension within 6 months of extending the term.
These new rules enable firms to vary a mortgage contract in this way without assessing affordability.
The FCA recognises the urgency with which these firms are seeking to deliver their charter commitments, and that some firms’ systems might not, at present, allow them to meet these requirements in full when fulfilling their commitments under the Charter.
Therefore, the FCA is now allowing firms time to bring their systems into compliance where they are currently unable to provide the disclosure required under MCOB 7.6.28R, when giving effect to these two new options (MCOB 11.6.3(3)(a) and (b)).
Where a firm cannot fulfil the disclosure requirement it should provide as much of the required disclosure as possible, in a durable medium. Firms should make clear the implications and risks associated with either option and take all reasonable steps to support the customer to make an informed choice, so they can understand the features, potential costs and benefits of the option they choose, before the change takes effect.
The FCA’s rules remain in force during this period. Non-compliant firms will be in breach of the FCA’s rules, notwithstanding this regulatory forbearance. The FCA will follow up with firms to confirm their compliance through routine supervision. During this period, the FCA’s supervisory approach will be proportionate where firms take all reasonable steps to give as much of the required disclosure as possible.