FCA published the final guidance to provide support to mortgage customers facing payment difficulties due to circumstances stemming from the COVID-19 pandemic. Section 7, titled "Repossessions," of this guidance has been updated on March 25, 2021, with effect from March 20, 2021, to set out the FCA expectations in respect of repossessions from April 01, 2021. This guidance is for firms dealing with mortgage customers experiencing payment difficulties due to coronavirus, including those who cannot resume payments after taking payment deferrals under the Payment Deferral Guidance, and for firms considering or taking repossession action. The guidance originally came into force on September 16, 2020 and remains in force until varied or revoked.
The guidance confirms that, from April 01, 2021, subject to any relevant government rules that prevent enforced repossessions for public health reasons, firms taking steps to enforce repossession of properties should only do so as a last resort in accordance with the FCA rules, updated guidance, and normal legal processes. The guidance also highlights that, as the deadline to apply for a payment deferral ends on March 31, 2021, FCA wants to reassure consumers in financial difficulty that support will continue to be available under the Tailored Support Guidance. FCA also published a report on how the firms are implementing this tailored support. The report is relevant for mortgage lenders and administrators, smaller deposit-taking lenders, non-bank mortgage lenders, credit card and loan providers, high-cost credit firms, and motor finance firms. The report found that firms have progressed well in implementing the Tailored Support Guidance and have acted quickly to build their capacity, though the report also highlights the improvement areas for firms. The following are the key findings of the report:
- Consumers have generally been able to get support as they come to the end of a payment deferral. FCA has not identified any systemic issues with firms' ability to meet the demand from customers seeking further help. The support identified in the report has typically been short term in nature, given the uncertainty of customers’ financial circumstances during the pandemic.
- All assessed firms had vulnerable customer policies in place and, as noted, 94% of mortgage firms and 64% of credit firms had reviewed or added to these policies light of the pandemic. Firms are encouraged to review the recently published guidance on vulnerable consumers and to embed relevant aspects into their processes to ensure that vulnerable customers are treated fairly.
- Due to the pandemic, some firms anticipated an increase in demand from customers in financial difficulty and recruited more staff to address that demand. Thus, there has been a significant increase in inexperienced staff helping customers, which may lead to an increased risk of harm. Firms are expected to ensure that all staff members are adequately trained and supervised to ensure that the right support is provided to customers.
- Some firms accelerated plans to automate aspects of the customer support journey. FCA found that, in general, these automated approaches were easy to navigate with minimal steps and helpful menus for customers to select from. However, some firms could improve the ease of access to non-digital support.
Keywords: Europe, UK, Banking, COVID-19, Credit Risk, Payment Deferrals, Consumer Credit, FCA
Leading economist; commercial real estate; performance forecasting, econometric infrastructure; data modeling; credit risk modeling; portfolio assessment; custom commercial real estate analysis; thought leader.
Previous ArticleCBB Consults on Liquidity Risk Module and SME Financing Requirements
The European Central Bank (ECB) is undertaking the integrated reporting framework (IReF) project to integrate statistical requirements for banks into a standardized reporting framework that would be applicable across the euro area and adopted by authorities in other EU member states.
The Basel Committee on Banking Supervision met, shortly after a gathering of the Group of Central Bank Governors and Heads of Supervision (GHOS), the oversight body of BCBS.
The International Organization of Securities Commissions (IOSCO) welcomed the work of the international audit and assurance standard setters—the International Auditing and Assurance Standards Board (IAASB)
The European Banking Authority (EBA) has been awarded the top European Standard for its environmental performance under the European Eco-Management and Audit Scheme (EMAS).
The Bank of England (BoE) published a Statistical Notice (2022/18), which informs that due to the Bank Holiday granted for Her Majesty Queen Elizabeth II’s State Funeral on Monday September 19, 2022.
The French Prudential Control and Resolution Authority (ACPR) announced that the European Banking Authority (EBA) has updated its filing rules and the implementation dates for certain modules of the EBA reporting framework 3.2.
The Australian Prudential Regulation Authority (APRA) announced reduction in the aggregate Committed Liquidity Facility (CLF) for authorized deposit-taking entities to ~USD 33 billion on September 01, 2022.
The China Banking and Insurance Regulatory Commission (CBIRC) published the administrative measures for internal control of wealth management companies, which come into force on the day of promulgation.
The Prudential Regulation Authority (PRA) proposed its approach to policy-making as it takes on wider rulemaking responsibilities under the Financial Services and Markets Bill.
The European Central Bank (ECB) published its opinion on the proposal for a regulation on harmonized rules on fair access to and use of data (Data Act).