FCA Issues Update on Tailored Support Guidance Amid Ongoing Crisis
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.
Related Links
Keywords: Europe, UK, Banking, COVID-19, Credit Risk, Payment Deferrals, Consumer Credit, FCA
Previous Article
CBB Consults on Liquidity Risk Module and SME Financing RequirementsRelated Articles
BIS and Central Banks Experiment with GenAI to Assess Climate Risks
A recent report from the Bank for International Settlements (BIS) Innovation Hub details Project Gaia, a collaboration between the BIS Innovation Hub Eurosystem Center and certain central banks in Europe
Nearly 25% G-SIBs Commit to Adopting TNFD Nature-Related Disclosures
Nature-related risks are increasing in severity and frequency, affecting businesses, capital providers, financial systems, and economies.
Singapore to Mandate Climate Disclosures from FY2025
Singapore recently took a significant step toward turning climate ambition into action, with the introduction of mandatory climate-related disclosures for listed and large non-listed companies
SEC Finalizes Climate-Related Disclosures Rule
The U.S. Securities and Exchange Commission (SEC) has finalized the long-awaited rule that mandates climate-related disclosures for domestic and foreign publicly listed companies in the U.S.
EBA Proposes Standards Related to Standardized Credit Risk Approach
The European Banking Authority (EBA) has been taking significant steps toward implementing the Basel III framework and strengthening the regulatory framework for credit institutions in the EU
US Regulators Release Stress Test Scenarios for Banks
The U.S. regulators recently released baseline and severely adverse scenarios, along with other details, for stress testing the banks in 2024. The relevant U.S. banking regulators are the Federal Reserve Bank (FED), the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC).
Asian Governments Aim for Interoperability in AI Governance Frameworks
The regulatory landscape for artificial intelligence (AI), including the generative kind, is evolving rapidly, with governments and regulators aiming to address the challenges and opportunities presented by this transformative technology.
EBA Proposes Operational Risk Standards Under Final Basel III Package
The European Union (EU) has been working on the final elements of Basel III standards, with endorsement of the Banking Package and the publication of the European Banking Authority (EBA) roadmap on Basel III implementation in December 2023.
EFRAG Proposes XBRL Taxonomy and Standard for Listed SMEs Under ESRS
The European Financial Reporting Advisory Group (EFRAG), which plays a crucial role in shaping corporate reporting standards in European Union (EU), is seeking comments, until May 21, 2024, on the Exposure Draft ESRS for listed SMEs.
ECB to Expand Climate Change Work in 2024-2025
Banking regulators worldwide are increasingly focusing on addressing, monitoring, and supervising the institutions' exposure to climate and environmental risks.