UK FCA Finalized Mortgage Guidance

On Nov. 17, UK FCA confirmed more support for mortgage borrowers.

  • FCA has confirmed support for mortgage borrowers that are impacted by coronavirus.
  • Follows UK FCA Oct. 2020 previous measures on interest-only mortgages, see #89231.
  • Also follows UK FCA Nov. 2020 proposed support for mortgage borrowers, see #89887.
  • Updated Guidance
  • FCA has confirmed updated guidance to firms setting out enhanced support that should be available to mortgage borrowers experiencing payment difficulties, related to Covid.
  • The guidance will be fully in force from Nov. 20, 2020, but the FCA encourages firms that are able to start providing this enhanced support sooner, to do so when they can.
  • FCA reiterates that consumers should keep up with payments on mortgages if they can afford to do so and should only seek support where considered absolutely necessary.
  • Payment Deferrals
  • FCA has also provided more detail on which groups will be able to access deferrals.
  • Those who have not yet had a deferral will be eligible for deferrals of 6 months in total.
  • Persons who currently have a deferral, will be eligible to top it up, to 6 months in total.
  • Those who have previously had payment deferrals of less than 6 months will be able to top up, as long as total deferrals do not exceed 6 months.
  • This includes those receiving tailored support and those who are behind on payments.
  • Those who have already had 6 months of deferrals will not be eligible for further one.
  • Firms will provide tailored support that is appropriate to the customers' circumstances.
  • This tailored support may include the option to defer further payments owed to them.
  • No one should have home repossessed, without agreement, until after Jan. 31, 2021.
  • Consumers will have until Mar. 31, 2021, to apply for an initial or a further deferral.
  • After that date, they will be able to extend existing deferrals to Jul. 31, 2021, provided these extensions cover consecutive payments, subject to maximum 6 months allowed.
  • Borrowers who have not yet taken a deferral, and who think they need the full 6 months should apply in good time before their February 2021 payment is due.
  • Credit Records
  • Payment deferrals under these proposals would not be reported as missed payments.
  • Does not mean that consumers’ ability to access credit will be unaffected in future.
  • As lenders take into account a range of information when making lending decisions.
  • Tailored support may be reported on credit file, and lenders should inform borrowers where this is so; deferrals offered as tailored support could be recorded on a credit file.
  • Interest-Only Mortgages
  • In October, the FCA issued separate guidance for borrowers with interest only or part-and-part mortgages whose capital repayment plans were affected by the crisis.
  • This means that borrowers whose mortgages matured from Mar. 20, 2020, can delay the repayment of the capital on their mortgage until Oct. 31, 2021.
  • FCA has confirmed that as well as accessing deferrals before maturity, borrowers can access deferrals after maturity without this affecting ability to delay capital repayment.
  • The FCA will continue to keep the support available to consumers under review.
  • Finalized Guidance Documents
  • Finalized Mortgages Payment Deferrals Guidance; finalized Mortgages Tailored Support Guidance; and updated Interest-Only Guidance.
  • Effectiveness
  • Guidance in fully in force from Nov. 20, 2020; consumers will have until Mar. 31, 2021, to apply for an initial or a further deferral; and can extend deferrals to Jul. 31, 2021.
  • FCA encourage firms to consider how they can best support their customers at this time, and to follow this guidance earlier than Nov. 20 where they are able to.
  • May help to limit the number of cases of customers dealt with since Oct. 31, whose outcomes will need to be reviewed under para 1.22 of payment deferral guidance.
  • For the period Nov. 17 to Nov. 20, 2020, a firm is free to act in line with this guidance without placing it in contravention of Principle 6, Principle 7, MCOB 2.5A, MCOB 13.
  • Nov. 17, 2020 UK FB Statement
  • On Nov. 17, 2020, UK FB issued statement responding to FCA final mortgage guidance.
  • Lenders committed to renewed support for mortgage customers facing difficulty.
  • As the Financial Conduct Authority confirms an extension to the mortgage payment deferral scheme until Jul. 31, 2021, with final applications due by Mar. 31, 2021.
  • 2.6mn mortgage payment deferrals have so far been granted since start of pandemic.
  • Just under 140,000 were still in place at the end of October; of those mortgage customers whose payment deferral has come to an end, evolving industry analysis suggests that over 80 per cent have now returned to making repayments.
  • Customers will now have until Mar. 31, to apply for initial or further payment deferral.
  • After that, they will be able to extend existing deferrals to no later than Jul. 31, 2021.
  • Customers who are newly impacted by coronavirus and who want to benefit from the maximum 6 months available should apply before their February 2021 payment is due.
  • The final guidance allows payment deferrals that are not consecutive, including for customers in arrears or receiving tailored support; FCA has clarified that this updated guidance applies retrospectively from Nov. 1, coming fully in to force on Nov. 20, 2020.
  • If a customer came to the end of a payment deferral between Oct. 31, and when this latest amended guidance comes into force, and have not had 6 months of deferrals, they will be eligible to apply for a retrospective payment deferral to cover this period.
  • On Nov. 19, 2020, UK FCA issued updated guidance on consumer credit, see #91255.

Regulators UK FCA
Entity Types Bank; BS; CNSM; CRB; IB; MG Orig; Servicer
Reference PR, FS20/17, 11/17/2020; COVID-19; Citation: UK FCA *MCOB* 2.5A, 13;
Functions Compliance; Financial; Product; Risk; Suitability; Treasury
Countries United Kingdom
Products Banking; Loan; Mortgage
Regions EMEA
Rule Type Final
Rule Date 11/17/2020
Effective Date 11/20/2020
Rule Id 90991
Linked to Rule :89887
Reg. Last Update 11/17/2020
Report Section UK

Last substantive update on 11/19/2020