The Financial Conduct Authority (FCA) has ordered banks and lenders to support financially distressed borrowers in repaying their mortgages and loans. Thursday’s decision came as many Britons were affected by the interest rate hike.
The UK’s financial market watchdog has already worked with nearly 100 lenders to assess the way they treat borrowers. I found many issues, including inadequate support tailored to individual circumstances, failure to respond appropriately to vulnerable clients, and ineffective financial guidance and debt advice.
The regulator has even secured up to £47m in damages from 17 lenders to more than 195,000 customers. These lenders fail to support customers in their difficulties.
“When we see companies not providing adequate support, we will act quickly to correct this. Companies are already paying up to £47m in compensation for failing to provide adequate support to borrowers,” said Sheldon Mills, FCA’s executive director of consumer and competition.
We have worked with nearly 100 lenders on how they deal with borrowers in financial difficulty.
Many companies follow our interim guidance to support borrowers during difficult times. Our proposals will help ensure that this continues.https://t.co/w4tj64qulM
– Financial Conduct Authority (TheFCA) May 25, 2023
Make the rules of the epidemic era permanent
The latest guidelines are an extension of these rules that were introduced during the pandemic to provide relief to stressed browsers. In addition, the regulator is considering making these rules permanent.
These rules would require “mortgage, consumer credit and overdraft providers” to support defaulted customers by making reduced or no-time payments or by changing the terms of the debt. They also need to ensure that payment arrangements are appropriate and that clients receive appropriate financial guidance. Overdue fee finishers cannot be higher than necessary and must take into account the general impact of the support arrangements on the mortgage balances.
“Many companies have been following our interim guidance, which was developed during the pandemic, to support borrowers through difficult times. Our proposals today will help ensure that continues,” Mills said. “If you are concerned about keeping up with payments, we encourage you to speak to your lender as soon as possible.”
The Financial Conduct Authority (FCA) has ordered banks and lenders to support financially distressed borrowers in repaying their mortgages and loans. Thursday’s decision came as many Britons were affected by the interest rate hike.
The UK’s financial market watchdog has already worked with nearly 100 lenders to assess the way they treat borrowers. I found many issues, including inadequate support tailored to individual circumstances, failure to respond appropriately to vulnerable clients, and ineffective financial guidance and debt advice.
The regulator has even secured up to £47m in damages from 17 lenders to more than 195,000 customers. These lenders fail to support customers in their difficulties.
“When we see companies not providing adequate support, we will act quickly to correct this. Companies are already paying up to £47m in compensation for failing to provide adequate support to borrowers,” said Sheldon Mills, FCA’s executive director of consumer and competition.
We have worked with nearly 100 lenders on how they deal with borrowers in financial difficulty.
Many companies follow our interim guidance to support borrowers during difficult times. Our proposals will help ensure that this continues.https://t.co/w4tj64qulM
– Financial Conduct Authority (TheFCA) May 25, 2023
Make the rules of the epidemic era permanent
The latest guidelines are an extension of these rules that were introduced during the pandemic to provide relief to stressed browsers. In addition, the regulator is considering making these rules permanent.
These rules would require “mortgage, consumer credit and overdraft providers” to support defaulted customers by making reduced or no-time payments or by changing the terms of the debt. They also need to ensure that payment arrangements are appropriate and that clients receive appropriate financial guidance. Overdue fee finishers cannot be higher than necessary and must take into account the general impact of the support arrangements on the mortgage balances.
“Many companies have been following our interim guidance, which was developed during the pandemic, to support borrowers through difficult times. Our proposals today will help ensure that continues,” Mills said. “If you are concerned about keeping up with payments, we encourage you to speak to your lender as soon as possible.”