FCA extends help on mortgages but deferrals to be recorded

The Financial Conduct Authority (FCA) has confirmed further support for mortgage holders if they face payment difficulties due to the coronavirus pandemic, but their credit files will be marked as a result.

Under current rules borrowers can request a three month payment holiday, but this is provision is due to expire at the end of October. The regulator’s finalised guidance published on Monday ensures help support for consumers who have taken payment deferrals and still face difficulties, and those whose financial situation may be newly affected by the pandemic after October 31.

The government's furlough scheme for workers is also due to expire on October 31 and economists are predicting a surge in job losses as companies face higher costs and lower demand.

Borrowers can take a first or second payment deferral without a negative impact on their credit file, but the new guidance means that further support from lenders can be reflected on file, as long as firms are clear about the implications for the customer.

FCA interim chief executive Christopher Woolard said: “Some consumers will continue to be impacted by coronavirus in the coming months, or be impacted for the first time. Consumers in these situations will benefit from firms providing them with tailored support.

“However, it is very important that consumers who can afford to resume mortgage payments should do so for their own long-term interests and so that help can be targeted at those most in need.”

Support will be prioritised for borrowers at “most risk of harm” or who face the “greatest financial difficulties”.

“The new guidance reinforces the need for firms to deliver outcomes that are right for individual borrowers rather than adopting “one size fits all” solutions. The FCA will be monitoring firms to ensure borrowers are treated fairly having regard to their individual circumstances,” the regulator said.

Under the measures firms will offer additional support, such as extending the repayment term or offering arrangements for no, or reduced, payments for a period.