On 5 November 2020, the FCA published a speech by Jonathan Davidson (Executive Director of Supervision – Retail and Authorisations) entitled Acting flexibly and treating customers fairly in the face of a pandemic.
Key points in the speech include:
- The fair treatment of consumers in an effective credit market has long been a top priority for the FCA. The regulator named it as 1 of its 5 key priorities in its 2020/21 Business Plan.
- Recognising the risks of problem debt and the inevitability of some consumers falling behind in their payments, the crisis has sharpened the FCA’s focus on appropriate forbearance for consumers.
- On 30 September 2020, the FCA published its finalised consumer credit guidance for forbearance post payment deferral. This builds on the FCA’s expectations set out for forbearance in its rules and principles in light of coronavirus.
- In this guidance the FCA has outlined the outcomes it wants to achieve and the steps for firms to meet these outcomes. In summary these are: (i) customers getting the time and advice needed to get a repayment plan that is suitable for their individual circumstances; (ii) repayment plans are reasonable and suitable; and (iii) firms are responding to the particular needs and challenges facing vulnerable customers. This means having a holistic approach to recognising and responding to signs of vulnerability.
- Scaling up appropriate forbearance is complex to get right, involves significant volumes of work, and can often bring up unexpected problems to solve. This becomes significantly more complex when it’s done while employees are working from home long-term, significant staff redeployment is needed and there might be complex modifications to IT systems. The FCA is aware of the challenges, it expects firms to take the necessary steps to treat customers fairly and it expects firms to have the systems and people in place to support consumers with the help they need.
- Over the coming months, the FCA is dedicating significant resources in its supervision to look at how firms have adapted to the challenges and the outcomes consumers receive. This will include considering how well firms have planned, resourced and trained their staff to ensure that borrowers get appropriate support and forbearance, when they need it.
- The FCA expects firms to spot signs of vulnerability and deliver appropriate customer service that responds flexibly to the needs of vulnerable consumers. The FCA expects firms to implement appropriate processes to evaluate where the needs of vulnerable consumers are not met, so that they can make improvements.