FCA is consulting on some minor changes to its Handbook as a result of the Breathing Space Regulations (the Regulations), which are expected to come into force in May 2021. This consultation applies particularly to consumer credit lenders and debt collectors, but is relevant to all regulated firms that need to comply with both FCA Handbook and the Regulations. It is also relevant to interested consumer groups and local authorities that give debt advice to consumers in England and Wales. FCA is requesting comments on this consultation by January 06, 2021.
The Regulations establish a scheme in England and Wales, giving someone in problem debt the right to legal protections from creditor action for up to 60 days while they receive debt advice and potentially enter an appropriate debt solution. A consumer can only access the breathing space moratorium after being advised and assessed as eligible by an FCA-authorized debt advice firm or a local authority or by accessing a mental health crisis moratorium. There is no 60-day limit to a mental health crisis moratorium period, which will usually end 30 days after the mental health crisis treatment has concluded. FCA wants to make sure that firms have clarity on how its rules interact with these Regulations. The moratorium includes protection from creditor action for most personal debts, including financial services debt, household bill arrears, and most public sector debt. Protections are not extended to mortgage payments on the principal and interest, but they do extend to payment of mortgage arrears not capitalized and interest, fees or any other charges on those arrears.
The consultation explains why changes are not needed to the Mortgages and Home Finance: Conduct of Business Sourcebook (MCOB) or the debt advice rules in the Consumer Credit Sourcebook, or CONC, and is of interest to regulated firms that will need to comply with the Regulations and those rules, including firms such as mortgage lenders or administrators subject to MCOB and authorized debt advice firms including not-for-profit debt advice bodies subject to the Consumer Credit Sourcebook. However, there are a number of areas in the Consumer Credit Sourcebook where FCA thinks it is necessary to clarify how the rules apply where the Regulations also apply and to avoid duplicating the effects of the Regulations in a disproportionate way. This consultation invites responses on the proposed changes to the FCA Handbook. It does not advise on interpreting or applying the Regulations. The government intends to publish guidance on the Regulations for creditors and organizations giving debt advice.
Comment Due Date: January 06, 2021
Keywords: Europe, UK, Banking, Credit Risk, Moratorium, Consumer Credit, FCA Handbook, FCA
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