The FCA has published its supplementary guidance note which sets out its expectations of firms dealing with mortgage customers who:
- are unable to resume payments after 2 payment deferrals;
- have benefitted from an initial payment deferral that expires at a time when the June guidance is no longer in effect; or
- experience payment difficulties as a result of the COVID-19 at a time when the June guidance is no longer in effect (whether or not they have had a payment deferral).
The FCA welcomes comments on the guidance note by 5pm on 1st September 2020 by emailing FCAconsumercredit@fca.org.uk.
The guidance sets out the following:
- firms must continue to engage with customers in good time, providing detailed information and giving them support where needed;
- firms should continue to work with those customers who are still facing or likely to face payment difficulties and can look at a number of options in response;
- customers should continue to be able to access appropriate forbearance which should be flexible and offer a range of short and long term options (and the guidance sets out detailed guidance on how a firm should react in this regard);
- firms should be particularly mindful of the impact of escalating debt where the forbearance support has been requested by the holder of a second charge mortgage;
- unless a customer objects, firms can capitalise deferred amounts (noting that where this relates to a second charge mortgage where 3 or more instalments have been deferred, firms must undertake a broader analysis of the customers circumstances and the impact of the capitalisation on their situation); and
- firms should continue to act in accordance with the June guidance where MCOBS 13 applies to customers unable to resume payments.
In terms of CRA reporting, the paper notes that the June guidance continues to apply with more detail being included in this guidance:
- firms should comply with the Coronavirus Data Reporting Guidance issued by the CRAs in consultation with SCOR;
- where a repayment arrangement is in place at the end of a deferral period and a customer is able to resume at least the level of the contractual payments, this should not be negatively reflected in their credit files; and
- for all customers, any further forms of support should be reported (including further full or partial payment deferrals);
- firms should be transparent about the reporting implications of any form of support with customers.
The guidance confirms that once the June guidance is no longer in force, firms can continue possession proceedings against customers in accordance with MCOB 13. The guidance reminds firms that possessions proceedings should only be commenced after all other options have been exhausted and confirms that no warrant for possession can be sought when:
- the home is required because the borrower or a member of their household is shielding, or required to self isolate; or
- where there is a local or more widespread lock-down in force.