FCA Guidance on Mortgages

FCA Guidance on Mortgages

This article was published on: 25th March 2020

The Financial Conduct Authority (“FCA”) has released guidance in a bid to clarify the uncertainties surrounding mortgage holidays for consumers. FCA Interim Chief Executive Christopher Woolard said: “our mortgage guidance underpins the actions taken by mortgage providers and will give confidence to both consumers and firms. In particular, we are making it clear that no responsible lender should be considering repossession as an appropriate measure at this time.”

The FCA guidance on mortgages states that lenders should:

  • Grant existing customers a payment holiday for an initial period of 3 months if they may experience payment difficulties as a result of coronavirus and where they have indicated that they wish to receive one;
  • Ensure that there are no additional fees or charges (other than additional interest) as a result of the payment holiday. The additional interest may be chargeable because the holiday period is added as an extension to the term of the loan; and
  • Ensure that the holiday period has no impact on any assessment of a customer’s credit rating.

The FCA has also made it clear that due to the anticipated difficulties being faced by homeowners during the coronavirus pandemic, repossession should not begin or continue unless the lender can demonstrate clearly that the customer has agreed it is in their best interests.

The FCA will continue to review measures as the situation develops and will update their guidance if necessary. This guidance is a welcome support to those homeowners who may encounter financial difficulty in these uncertain times.

Author: Rebecca Parker, Paralegal

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