05 Mar 2021 | Posted In Money advice news

The FCA’s mortgages tailored support guidance sets out its expectation that firms should not enforce mortgage repossessions, except in exceptional circumstances, before 1 April 2021.

It is publishing updated draft guidance for firms from 1 April, to ensure that mortgage customers whose homes may be repossessed are treated fairly and appropriately, particularly where there are risks of harm to customers who are vulnerable as a result of coronavirus (Covid-19).

This means that from 1 April, firms can enforce repossessions, but only if they act in accordance with FCA guidance, and regulatory requirements which mean that repossession should only take place as a last resort if all other reasonable attempts to resolve the position have failed. Firms will also need to comply with any relevant legislative requirements which may prevent firms from enforcing repossession in certain parts of the UK. The FCA recognises that repossessions can be difficult and stressful but delaying repossession can lead to poor customer outcomes as a result of increased balances and equity erosion. This is why it proposes to allow firms to repossess homes when it is fair and reasonable to do so.

The FCA is seeking comment on these proposals by 10am on 10 March 2021.

For consumer credit, in January, the FCA updated the credit Tailored Support Guidance so that firms were able to repossess goods and vehicles from 31 January 2021, but only as a last resort, and in accordance with all relevant government public health guidelines and regulations (including social distancing and shielding) when taking possession.

Continued support for consumers as payment deferral application deadline approaches

The FCA wants to remind consumer credit and mortgage consumers that the deadline for applications for new payment deferrals under the Payment Deferral Guidance (PDG) is 31 March 2021. Only consumers still in a payment deferral (under the PDG) on 31 March will be able to extend their payment deferral beyond that date. All deferrals under that guidance will end by 31 July 2021 at the latest. However, consumers should think carefully about whether they need to take a payment deferral. Support will continue to be available to consumers in financial difficulty under our Tailored Support Guidance (TSG), which may be more suitable for their needs in the long-term.

From 1 April 2021, consumers who are newly impacted by coronavirus, or find themselves impacted again (whether or not they have previously had a payment deferral), should receive support from their lender in the form of tailored support under the TSG which reflects their individual needs and circumstances. This could include short-term support such as a payment deferral, if it is appropriate, although this would be subject to normal credit reporting.

The PDG enabled firms to deal with unprecedented demand for short-term support resulting from the pandemic. However, demand for payment deferrals has reduced and firms now have the capacity to offer both shorter and longer-term support. That support should provide better outcomes for consumers as it includes a wider range of options and is tailored to their individual needs.

Next steps: firms’ implementation of the TSG

The FCA understands that many consumers will continue to face difficulties as a result of the uncertainty caused by the crisis. It will continue to monitor and supervise how firms are implementing the guidance, to ensure that they continue to provide consumers with support that reflects the challenges that they face. The FCA will publish the findings of its initial supervisory work in this area by the end of March.