On 16 June 2020, the FCA updated its web page providing guidance to firms as regards mortgages and customers who are in financial difficulties due to the COVID-19 pandemic. The FCA originally published the guidance on 20 March 2020 and it was updated on 4 June and now on 16 June 2020. Unless renewed or updated, the guidance expires on 31 October 2020.
The FCA has updated the following sections of its guidance:
- Customers who have not yet had a payment deferral. The FCA explains that firms who were unable to provide personalised information under the version of the guidance that came into force on 4 June 2020, but provided information and assistance in a manner which is consistent with the update now provided, will not be treated as having acted inconsistently with the updated guidance. The updated guidance provides that where a firm is not able to provide personalised information it should provide customers with the clearest information and assistance possible to help them understand the impact of their decision on their monthly payment and mortgage term and enable them to make an informed decision. In considering how best to provide this information and assistance a firm may wish to consider a combination of options such as:
- representative examples that are relevant to the customer’s circumstances;
- representative examples that a customer can be guided through (e.g. using an online tool), relevant to the customer’s circumstances;
- providing a calculator embedded on its website that will allow a customer to understand the impact on their own monthly payment, mortgage term, or both;
- signposting to an external (to the firm) calculator that can be used by the customer to understand the impact on their own monthly payment, mortgage term, or both, and providing the customer with information on their loan balance, remaining term and interest rate so that this can be used in the calculator; and
- signposting to an external (to the firm) calculator and signposting to where customers can find reasonably up-to-date information on their loan balance, remaining term and interest rate so that this can be used in the calculator.
Where a firm is able to provide personalised information through some but not all communication channels, it should make this clear to customers so that they can choose to use channels where personalised information is available.
- Customers unable to resume full payments. The FCA states that firms who were unable to provide personalised information under the version of the guidance that came into force on 4 June 2020, but provided information and assistance in a manner which is consistent with the update now provided, will not be treated as having acted inconsistently with the updated guidance. The updated guidance provides that where a firm is not able to provide personalised information it should provide customers with the clearest information and assistance possible to help them understand the impact of their decision on their monthly payment and mortgage term and enable them to make an informed decision. In considering how best to provide this information and assistance a firm may wish to consider a combination of options such as:
- representative examples that are relevant to the customer’s circumstances;
- representative examples that a customer can be guided through (e.g. using an online tool), relevant to the customer’s circumstances;
- providing a calculator embedded on its website that will allow a customer to understand the impact on their own monthly payment, mortgage term, or both;
- signposting to an external (to the firm) calculator that can be used by the customer to understand the impact on their own monthly payment, mortgage term, or both, and providing the customer with information on their loan balance, remaining term and interest rate so that this can be used in the calculator; and
- signposting to an external (to the firm) calculator and signposting to where they can find reasonably up-to-date information on their loan balance, remaining term and interest rate so that this can be used in the calculator.
Where a firm is able to provide personalised information through some but not all communication channels, it should make this clear to customers so that they can choose to use channels where personalised information is available.
- Interaction with MCOB provisions. Firms that were unable to provide personalised information under the version of the guidance that came into force on 4 June 2020, but provided information and assistance in a manner which is consistent with the update now provided, will not be treated as having acted inconsistently with the updated guidance. The updated guidance provides that where an existing regulated mortgage contract is being varied or other assistance is provided in line with the updated guidance, MCOB 7.6.28R and MCOB 7.6.28AR set out the required disclosure about any change in the payments due. Where a new regulated mortgage contract is entered into, the standard MCOB requirements regarding new contracts apply. In respect of disclosure this means that firms will need to issue an illustration.
