The COVID-19 pandemic has impacted the lives of every individual across the country and brought the fair treatment of customers into even sharper focus. As the virus began to unfold, the regulator took swift action to publish various guidance outlining its expectations as to how firms should treat customers who are impacted by it to ensure they are treated fairly having regard to their individual circumstances.

Businesses across the financial sector have also responded rapidly to the crisis in an unprecedented manner with the most recently published UK Finance statistics[1] reporting that:

  • 27 million customers were offered the option of interest-free borrowing on their bank accounts for three months on the first £500 of their arranged overdraft;
  • 9 million mortgage payment deferrals have been granted in the first three months of published regulatory guidance (equivalent to 1 in 6 mortgages in the UK);
  • Over one million payment deferrals have been offered by credit card lenders; and
  • Over 700,000 payment deferrals have been granted on personal loans.

In September 2020, the regulator published further guidance as regards its expectations of firms from a fair customer treatment perspective from the end of October and beyond, which is the point in time that its original temporary guidance comes to an end. This, coupled with the ending of the Government’s furlough scheme in October as well and the potential of a second wave of the virus are three important triggers for firms thinking through their next phase of response to the pandemic from a conduct and customer point of view.

This gives rise to a number of questions that firms can be thinking through as they prepare for autumn, including:

  • To what extent is their customer base likely to be impacted by the ending of the furlough scheme and temporary regulatory guidance?
  • How clear are staff on the range of forbearance tools available to customers that need further support, the circumstances under which these would be appropriate and when escalation would be required?
  • Where customers have exhausted available forbearance and are unlikely to get back on track, how will firms recommence action to recover debts (e.g. through possession where relevant) and what additional factors will need to be considered (e.g. requirements around regional lockdowns)?
  • Is the business operationally ready for likely increases in customer contact over the coming months?
  • To what extent is management information and reporting sufficient to inform oversight of the firm’s actions as it enters this new phase of the COVID-19 response?
  • What lessons can be learned from the firm’s initial response to COVID-19 that can be taken forward for the future?

We can support businesses in thinking through these question areas and their associated implications which can be complex and wide ranging. Furthermore, to support businesses in this area we are in the process of developing a conduct “HealthCheck” product. This will help firms assess the strength of their conduct and fair customer treatment response to the pandemic and identify relevant learnings for the future. Should you wish to discuss this further with us, please do get in touch.

[1] Sources: (i) https://www.ukfinance.org.uk/covid-19-press-releases/lenders-provide-over-one-million-repayment-deferrals-on-credit-cards (ii) https://www.ukfinance.org.uk/press/press-releases/lenders-grant-over-million-payment-deferrals-to-mortgage-holders-in-three-months