FCA Finalizes Additional Guidance to Support Mortgage Borrowers
FCA has published additional guidance for firms in relation to the mortgage payment deferrals, with the guidance becoming effective on September 16, 2020. The additional guidance sets out how firms should provide tailored support to mortgage borrowers who have benefited from payment deferrals under the current guidance and who continue to face financial difficulties as well as to mortgage borrowers whose financial situation may be newly affected by COVID-19 after the current guidance ends. The existing guidance, which was published in June 2020, will continue to provide support for those impacted by COVID-19 until October 31, 2020. FCA also published a statement (FS20/14) that summarizes feedback received to the additional guidance that was proposed in August 2020.
The additional guidance stipulates that firms will offer further short and longer-term support options to reflect the specific circumstances of their customers. This could include extending the repayment term or restructuring the mortgage. Where consumers need further short-term support, firms can continue to offer arrangements for no or reduced payments for a specified period to give customers time to get back on track. The guidance requires firms to prioritize support for borrowers who are at most risk of harm or face the greatest financial difficulties. Firms are also required to provide borrowers with the support they need in managing their finances (including through self-help and money guidance) and refer borrowers to organizations that can provide free debt advice if this meets their needs and circumstances.
In case borrowers require further support from lenders, either at the end of payment holidays under the FCA guidance or where they are in need of support for the first time, these further arrangements can be reflected on credit files in accordance with normal reporting processes. This will help to ensure that lenders have an accurate picture of consumers’ financial circumstances and reduce the risk of unaffordable lending. Firms are required to be clear about the credit file implications of any forms of support offered to borrowers.
The new guidance reinforces the need for firms to deliver outcomes that are right for individual borrowers, instead of adopting “one size fits all” solutions. FCA will monitor firms to ensure that borrowers are treated fairly with regard to their individual circumstances. The June guidance is due to expire on October 31 and FCA does not intend to extend the guidance. This additional guidance ensures consumers will still be able to obtain the support they need from their lenders after their payment holiday ends or if they are newly affected by COVID-19 after October 31. However, FCA will keep the guidance under review and, if circumstances change significantly, consideration will be given to any further measures that may be needed to support consumers during the ongoing pandemic.
Related Links
Keywords: Europe, UK, Banking, COVID-19, Payment Deferrals, Regulatory Capital, Credit Risk, FCA
Featured Experts
María Cañamero
Skilled market researcher; growth strategist; successful go-to-market campaign developer
Nicolas Degruson
Works with financial institutions, regulatory experts, business analysts, product managers, and software engineers to drive regulatory solutions across the globe.
Victor Calanog, Ph.D.
Leading economist; commercial real estate; performance forecasting, econometric infrastructure; data modeling; credit risk modeling; portfolio assessment; custom commercial real estate analysis; thought leader.
Previous Article
ESMA Group Advises ESAs on Proposed ESG Disclosure StandardsRelated Articles
EBA Proposes Standards for IRRBB Reporting Under Basel Framework
The European Banking Authority (EBA) proposed implementing technical standards on the interest rate risk in the banking book (IRRBB) reporting requirements, with the comment period ending on May 02, 2023.
FED Issues Further Details on Pilot Climate Scenario Analysis Exercise
The U.S. Federal Reserve Board (FED) set out details of the pilot climate scenario analysis exercise to be conducted among the six largest U.S. bank holding companies.
US Agencies Issue Several Regulatory and Reporting Updates
The Board of Governors of the Federal Reserve System (FED) adopted the final rule on Adjustable Interest Rate (LIBOR) Act.
ECB Issues Multiple Reports and Regulatory Updates for Banks
The European Central Bank (ECB) published an updated list of supervised entities, a report on the supervision of less significant institutions (LSIs), a statement on macro-prudential policy.
HKMA Keeps List of D-SIBs Unchanged, Makes Other Announcements
The Hong Kong Monetary Authority (HKMA) published a circular on the prudential treatment of crypto-asset exposures, an update on the status of transition to new interest rate benchmarks.
EU Issues FAQs on Taxonomy Regulation, Rules Under CRD, FICOD and SFDR
The European Commission (EC) adopted the standards addressing supervisory reporting of risk concentrations and intra-group transactions, benchmarking of internal approaches, and authorization of credit institutions.
CBIRC Revises Measures on Corporate Governance Supervision
The China Banking and Insurance Regulatory Commission (CBIRC) issued rules to manage the risk of off-balance sheet business of commercial banks and rules on corporate governance of financial institutions.
HKMA Publications Address Sustainability Issues in Financial Sector
The Hong Kong Monetary Authority (HKMA) made announcements to address sustainability issues in the financial sector.
EBA Updates Address Basel and NPL Requirements for Banks
The European Banking Authority (EBA) published regulatory standards on identification of a group of connected clients (GCC) as well as updated the lists of identified financial conglomerates.
ESMA Publishes 2022 ESEF XBRL Taxonomy and Conformance Suite
The General Board of the European Systemic Risk Board (ESRB), at its December meeting, issued an updated risk assessment via the quarterly risk dashboard and held discussions on key policy priorities to address the systemic risks in the European Union.
