Mortgages
The FCA’s Mortgages Tailored Support Guidance sets out its expectation that firms should not enforce mortgage repossessions, except in exceptional circumstances, before 1 April 2021.
The FCA published updated draft guidance for firms from 1 April 2021, to ensure that mortgage customers whose homes may be repossessed are treated fairly and appropriately, particularly where there are risks of harm to customers who are vulnerable as a result of coronavirus (Covid-19).
This means that from 1 April 2021, firms can enforce repossessions, but only if they act in accordance with the FCA’s guidance, and regulatory requirements which mean that repossession should only take place as a last resort if all other reasonable attempts to resolve the position have failed. Firms will also need to comply with any relevant legislative requirements which may prevent firms from enforcing repossession in certain parts of the UK.
Consumer credit
For consumer credit, in January 2021, the FCA updated the Credit Tailored Support Guidance so that firms were able to repossess goods and vehicles from 31 January 2021, but only as a last resort, and in accordance with all relevant government public health guidelines and regulations (including social distancing and shielding) when taking possession.
Continued support for consumers as payment deferral application deadline approaches
For consumer credit and mortgage consumers the deadline for applications for new payment deferrals under the Payment Deferral Guidance (PDG) was 31 March 2021. Only consumers still in a payment deferral (under the PDG) on 31 March 2021 were able to extend their payment deferral beyond that date. All deferrals under that guidance will end by 31 July 2021 at the latest. However, consumers should think carefully about whether they need to take a payment deferral. Support will continue to be available to consumers in financial difficulty under the Tailored Support Guidance, which may be more suitable for their needs in the long-term.
From 1 April 2021, consumers who are newly impacted by coronavirus, or find themselves impacted again (whether or not they have previously had a payment deferral), should receive support from their lender in the form of tailored support under the Tailored Support Guidance which reflects their individual needs and circumstances. This could include short-term support such as a payment deferral, if it is appropriate, although this would be subject to normal credit reporting.
The PDG enabled firms to deal with unprecedented demand for short-term support resulting from the pandemic. However, demand for payment deferrals has reduced and firms now have the capacity to offer both shorter and longer-term support. That support should provide better outcomes for consumers as it includes a wider range of options and is tailored to their individual needs.
