On 10 April 2024, the Financial Conduct Authority (FCA) published Policy Statement PS24/2, which confirms its final rules to strengthen protections for borrowers in financial difficulty, as well as summarising and responding to feedback received on CP23/13.

The FCA notes that PS24/2 will primarily affect consumer credit lenders; premium finance firms; mortgage lenders and administrators; home purchase providers and administrators; firms that carry out activities in relation to consumer hiring, operating an electronic system in relation to lending (in relation to a borrower under a P2P agreement) or debt collecting; consumer credit and mortgage lenders in supervised run-off under the financial services contracts regime; and Gibraltar-based consumer credit and mortgage lenders passporting into the UK.

Background

To address UK households’ weakened financial resilience following the coronavirus pandemic and increasing cost of living, the FCA consulted in May 2023 on rules to strengthen protections for mortgage, consumer credit and overdraft customers in financial difficulty through CP23/13. The consultation included proposals to incorporate aspects of the coronavirus Tailored Support Guidance (TSG) into its Handbook, as well as including further targeted changes to support customers in financial difficulty. PS24/2 confirms the FCA’s final rules following the consultation.

Key changes

CP23/13 set out the aspects of the TSG that the FCA proposed to incorporate into the Handbook, with key proposed changes including:

  • Broadening the scope of relevant consumer credit and mortgage chapters to make clear to firms that appropriate support should be provided to customers in or at risk of payment difficulty.
  • Enhancing the FCA’s expectations around customer engagement and providing information including on money guidance and debt advice.
  • Expecting firms to consider a range of forbearance options and take reasonable steps to ensure arrangements remain appropriate.
  • For consumer credit, expecting firms to take into account the customer’s individual circumstances when providing forbearance (which is already expected for mortgage firms).

It also proposed targeted additional changes, separate to the TSG, to support consumers in financial difficulty, as well as specific additional changes for consumer credit firms and for mortgages.

The FCA received 39 responses from stakeholders, who were largely supportive of its proposals. It confirms in PS24/2 that it is finalising most of the rules and guidance broadly as they were consulted upon, with some amendments which are listed in paragraph 1.15.  

Next steps

The rules enter into force on 4 November 2024 and the FCA will withdraw the TSG at the same time.