The FCA has announced new draft proposals for firms to provide tailored support to mortgage borrowers facing payment difficulties due to COVID-19.
Firms are currently providing support for those impacted by coronavirus until 31 October, with consumers able to take a first or second three-month payment deferral.
The regulator has indicated it expects this current guidance to expire on 31 October but that it will keep this under review depending on “how the wider situation develops”.
New draft guidance proposes that firms should consider including extending the repayment term or a restructuring of the mortgage, and that for consumers who need further short-term support, firms should offer arrangements for no or reduced payments for a specified period. The regulator suggested this will give customers “time to get back on track”.
During the initial phase of the pandemic, payment holidays provided mortgage borrowers with immediate and temporary support. The FCA suggested the majority of customers who have had a payment holiday are expected to resume full repayment but added that many will remain in financial difficulty.
Under the proposed guidance, the regulator added that firms should prioritise giving tailored support to borrowers who are at most risk of harm, or those who face the greatest financial difficulties.
FCA interim chief executive, Christopher Woolard, said: “It is important that consumers who can afford to resume mortgage payments should do so. However, we understand that borrowers facing payment difficulties because of the pandemic will continue to face uncertainty and may also experience temporary interruptions in income.
“We are proposing that firms contact their borrowers in good time before the end of a payment holiday, and work with them to come up with a tailored plan to help get them back on track. Firms should not take a ‘one size fits all’ approach.”
The FCA also indicated that stakeholders could make comments on its draft guidance up to Tuesday 1 September.
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