On 11 March 2022, the FCA published a letter (dated 11 March 2022) to firms within its building societies portfolio.

In the letter the FCA provides an:

  • Updated view of the current key risks of harm and outlines its expectations of societies.
  • Overview of its supervisory strategy and programme of work to ensure that firms are meeting its expectations, and harms are being appropriately remedied.

The FCA reports that it continues to see challenges to the building societies sector in areas such as responsible lending, managing arrears and forbearance, LIBOR transition and IT resilience. The FCA also deals with what it sees as the key harms for consumers being customer treatment and operational issues (including resilience). In terms of the FCA’s areas of focus, these include the fair treatment of consumers and the consumer duty. The FCA also discusses the following four areas where it expects building societies to pay particular attention to the needs of consumers:

  • Treating customers in vulnerable circumstances fairly.
  • Supporting customers in financial difficulty.
  • Responsible lending.
  • Managing maturing interest-only (IO) mortgages.

When discussing supporting customers in financial difficulty, the FCA reminds firms of its Tailored Support Guidance for mortgages, consumer credit and overdrafts and the key findings published in March 2021 on coronavirus linked forbearance. The FCA states that these publications continue to provide an appropriate framework for lenders to support these customers.

The FCA also covers additional areas of consideration including cyber risk and operational resilience. In particular, it reminds firms that in March last year it published Policy Statement 21/3 ‘Operational resilience: Feedback to CP19/32 and final rules’ and a shared policy summary ‘Building operational resilience: Impact tolerances for important business services’. The rules apply to firms within the FCA’s building societies’ portfolio and there are key actions and deadlines that firms need to be ready to comply with from 31 March 2022 to 31 March 2025.