Support for customers who are struggling to pay their mortgage due to coronavirus

The proposal outlines the options firms will be required to provide customers coming to an end of a payment holiday, as well as those who are yet to request one.

For customers yet to request a payment holiday, the time to apply for one would be extended until 31 October 2020.

For those who are still experiencing temporary payment difficulties due to coronavirus, firms should continue to offer support, which could include extending a payment holiday by a further three months.

Christopher Woolard, Interim Chief Executive at the FCA, said: “Our expectations are clear – anyone who continues to need help should get help from their lender.

“We expect firms to work with customers on the best options available for them, paying particular attention to the needs of their vulnerable customers, and to provide information on where to access help and advice.

“Where consumers can afford to re-start mortgage payments, it is in their best interests to do so. But where they can’t, a range of further support will be available. People who are struggling and have not had a payment holiday, will continue to be able to apply until 31 October.’

If the proposals are confirmed, the FCA would expect:

• Customers who can afford to return to full repayment should do so in their best interests – at the end of a payment holiday, firms should contact their customers to find out if they can resume payments and if so, agree a plan on how the missed payments will be repaid.
• Anyone who continues to need help gets help – lenders should continue to support customers who have already had a payment holiday where they need further help. Firms are expected to engage with their customers and find out what they can re-pay and, for those who remain in temporary financial difficulty, offer further support. As part of this firms should consider a further three-month payment holiday.
• Extending the time the scheme is available to people who may be impacted at a later date – customers that have not yet had a payment holiday and experiencing financial difficulty will be able to request one until 31 October 2020.
• Keeping a roof over people’s head during a public health crisis – the current ban on 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.
• Payment holidays and partial payment holidays offered under this guidance should not have a negative impact on credit files. However, consumers should remember that credit files aren’t the only source of information which lenders can use to assess creditworthiness.

This guidance would not prevent firms from providing more favourable forms of assistance to the customer, such as reducing or waiving interest.

Firms should consider signposting customers towards sources of debt advice. Debt advice may be helpful for customers coming to the end of payment holidays and may be particularly useful for consumers with pre-existing payment shortfalls or who are likely to be in longer-term financial difficulty.

When implementing this guidance, firms should be particularly aware of the needs of their vulnerable customers and consider how they engage with them. For customers who aren’t able to use online services (such as digital channels), firms should make it easy for customers to access alternatives.

The FCA welcomes comments on these proposals until 5pm on Tuesday 26 May and expects to finalise the guidance shortly afterwards.

This guidance only applies to mortgages. It does not apply to consumer credit products which are covered by separate guidance which will be updated in due course.

Gareth Shaw, Head of Money at Which?, said: “The extension of these measures will bring relief to people who would otherwise struggle financially during the challenging months ahead.

“Mortgage lenders should make the process as straightforward as possible, ensuring people can easily access the support they need.

“Consumers should also consider their options carefully as a mortgage payment holiday will likely lead to increased payments in the future – so it is likely to be in their interest to continue making payments as normal if that is feasible.”