On 20 March 2020, the FCA published new guidance for mortgage providers and for lenders taking part in the Coronavirus Business Interruption Loan Scheme.
In terms of mortgages, the new guidance provides that firms should:
- grant customers a payment holiday for an initial period of 3 months, where they may experience payment difficulties as a result of coronavirus (Covid-19) and where they have indicated they wish to receive one; and
- ensure that there is no additional fee or charge (other than additional interest) as a result of the payment holiday.
The guidance also sets out the steps firms should take to ensure that the payment holiday does not have a negative impact on the customer’s credit score.
The FCA has also made it clear that in the current circumstances, it does not consider that repossession will be in the best interests of the customer. As a result, repossession should not be commenced or continued with unless the firm can demonstrate clearly that the customer has agreed it is in their best interest.
The FCA will review the guidance in the next 3 months in the light of developments regarding coronavirus and will issue amended guidance extending the period of the payment holiday if appropriate.
The guidance is relevant to firm behaviour only to the extent it is current at the time of the behaviour in question.
The guidance builds on Principle 6 (‘A firm must pay due regard to the interests of its customers and treat them fairly’) and MCOB 2.5A.1R (‘A firm must act honestly, fairly and professionally in accordance with the best interests of its customer’). It is potentially relevant to enforcement cases and the FCA may take it into account when considering whether it could reasonably have been understood or predicted at the time that the conduct in question fell below the standards required by Principle 6 and MCOB 2.5A.1R.