On 2 June 2020, the FCA updated its guidance published in March concerning the fair treatment of home finance customers in temporary payment difficulty as a result of the current exceptional circumstances arising out of coronavirus.
The FCA confirms that:
- Customers that have not yet had a payment holiday and who experience financial difficulty have until 31 October 2020 to request one.
- The current ban on lender repossessions of homes will be continued to 31 October 2020. This will ensure people are able to comply with the government’s policy to self-isolate if they need to.
- Firms will communicate with customers regarding what happens when their payment holiday ends. They should offer a range of options for how the missed payments will be repaid, if they are able to resume payments.
- Lenders will continue to support customers who have already had a payment holiday where they need further help. Firms should contact their customers to find out what they can re-pay and, for those who remain in temporary financial difficulty, offer further support, which will include the option of a further three-month full or part payment holiday.
- Payment holidays offered under the guidance will not have a negative impact on credit files. However, consumers should remember that lenders may use information obtained from other sources, such as bank account information, in their lending decisions.
Where there has been an assignment of the rights under the mortgage contract to a non-authorised person, the person must still comply with general consumer protection law including the Consumer Protection from Unfair Trading Regulations 2008. A commercial practice may be unfair under those Regulations if (among other things) it contravenes the requirements of professional diligence. Professional diligence means the standard of special skill and care which a trader may reasonably be expected to exercise towards consumers. The FCA guidance is intended to describe the standards of skill and care the regulator considers may reasonably be expected of lenders in the mortgages market in the current exceptional circumstances of coronavirus. If, therefore, a lender does not follow the FCA guidance, that could call into question whether it is meeting the requirements of the 2008 Regulations, even if the lender is not regulated.
The guidance applies in respect of a customer regardless of whether they are in a payment shortfall. Where a firm is already taking or has taken steps under MCOB 13 in relation to the customer, the firm should consider whether further complementary measures to help the customer are appropriate in light of the guidance. Customers in payment shortfall should not receive less favourable treatment than other customers.
The FCA will keep the guidance under review and unless renewed or updated, it will expire on 31 October 2020.