Category: MCOB

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FCA announces further proposals to support mortgage borrowers impacted by COVID-19

Late yesterday afternoon, on 2 November 2020, the UK Financial Conduct Authority published a press release setting out its further proposals to support mortgage borrowers impacted by COVID-19. There is a draft further updated guidance for firms and a draft updated additional guidance for firms.

The FCA proposes:

– those who have not yet had a payment deferral will be eligible for two payment deferrals of up to six months in total;

– those who have had one payment deferral, will be eligible for another payment deferral of up to three months;

– those who have restarted repayments after an initial payment deferral will be eligible for another payment deferral of up to three months; 

– to allow borrowers until 31 January 2021 to ask for a payment deferral;

– if borrowers can afford to make repayments then they should continue to do so;

– borrowers should hold off contacting their lender until the enhanced measures are in place; and

– to stop any repossessions (without the borrower’s consent) before 31 January 2021.

The FCA has invited comments by 10am on 5 November 2020.

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FCA to announce further support for mortgage borrowers

On 31 October 2020, and following the Prime Minister’s announcement of a further month-long lockdown for England, the UK Financial Conduct Authority issued a press release saying it will announce further support for mortgage borrowers on 2 November 2020.

It seems likely that:

– If a mortgage borrower has not had deferral already because they are unable to make their repayments because of COVID-19, they will be entitled to ask for deferral of up to six months.

– If a mortgage borrower has already had a payment deferral because of COVID-19 of less than six months, they will be entitled to ask for another deferral so the maximum total deferral is six months.

– If a mortgage borrower has already had a payment deferral because of COVID-19 of six months, and are still unable to make their repayments because of COVID-19, they will need to contact their lender for ‘tailored support’.

The FCA is also considering the implications of this approach for the consumer credit industry.

UK Finance and the Building Societies Association have published a joint press release following the announcement.

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Butterworths Financial Regulation Service – updated commentary on CONC, and new commentary on MCOB, published

Issue 112 of Butterworths Financial Regulation Service has now been published. I’ve written a new chapter on CONC 6, and reviewed and revised the existing chapters on CONC (including adding the latest COVID-19 guidance published by the Financial Conduct Authority).

I’m also delighted to have published brand new commentary on MCOB. There will be further new chapters over the coming issues but this issue has:

– an introductory chapter setting the scene on mortgage regulation;

– commentary on MCOB 1, 10, 10A, 12 and 13.

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FCA says mortgage firms must do more to make sure appropriate equity release advice is given

On 17 June 2020, the UK Financial Conduct Authority published a press release saying firms must do more to make sure they are always giving appropriate advice to equity release consumers.

The FCA’s review says the equity release market works well for “many consumers“. But there are three “significant areas of concern” which increases the risks for consumers:

-advice given by firms did not always sufficiently take into account consumers’ personal circumstances;

– consumers reasons for looking at equity release were not always challenged by firms; and

– firms weren’t always able to evidence that their advice was suitable.

The detailed rules on equity release are in Chapter 8 and Chapter 9 of the Mortgages and Home Finance: Conduct of Business Sourcebook.

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FCA publishes updated finalised guidance for mortgages

On 4 June 2020 the UK Financial Conduct Authority published further guidance for customers who are unable to make their mortgage payments because of the impact of COVID-19.

However, and on 16 June 2020, the FCA revised this guidance. These changes say:

– firms should try and give as close to personalised information as possible (following lobbying from the industry that there are likely to be practical problems with providing personalised information);

– there are some changes to the guidance for (a) customers who have not yet had a payment deferral (to suggest a representative example relevant to the customer’s circumstances could be provided instead), (b) customers unable to resume full payments (with a similar suggestion of a representative example) and (c) the interactions with MCOB (particularly on variations and MCOB 7.6.28R and MCOB 7.6.28AR).

The guidance is set to expire on 31 October 2020 but the FCA may review and update before then.