During the initial phase of the pandemic, payment holidays provided mortgage borrowers with immediate and temporary support. 

They have helped millions of consumers through the immediate impacts of the current emergency.

The majority of customers who have had a payment holiday are expected to resume full repayment. However, many will remain in financial difficulty.

The additional draft guidance for firms will ensure that consumers — both those who have benefitted from payment deferrals under the current guidance who continue to face financial difficulties, as well as those whose financial situation may be newly affected by coronavirus after the current guidance ends — get the support they need.

It proposes that firms should consider the appropriateness, and use of a range of different short- and long-term support options to reflect the specific circumstances of their customers — this could include extending the repayment term or restructuring of the mortgage. 

Where consumers need further short-term support, firms should offer arrangements for no or reduced payments for a specified period to give customers time to get back on track.

The current guidance will continue to provide support for those impacted by coronavirus until 31st October 2020. 

The watchdog expects the current guidance to expire on 31st October, but will keep this under review, depending on how the wider situation develops.

•   Marc Goldberg, Mark Posniak and Tomer Aboody discuss their business's Covid-19 journeys
•   FCA consults on new rules to improve open-ended property fund structures
•   FCA update on Covid-19 and its impact on mortgage repossessions

“It is important that consumers who can afford to resume mortgage payments should do so,” said Christopher Woolard, interim chief executive at the FCA.

“However, we understand that borrowers facing payment difficulties because of the pandemic will continue to face uncertainty and may also experience temporary interruptions in income. 

“We are proposing that firms contact their borrowers in good time before the end of a payment holiday, and work with them to come up with a tailored plan to help get them back on track. 

“Firms should not take a ‘one size fits all’ approach.”

Under the proposed guidance, firms should prioritise giving tailored support to borrowers who are at most risk of harm, or who face the greatest financial difficulties. 

Firms should also provide borrowers with the support they need in managing their finances, including through self-help and money guidance, and refer borrowers to debt advice if this meets their needs and circumstances.

Where borrowers require further support from lenders, either at the end of payment holidays under the regulator’s guidance, or where they are in need of support for the first time, this would 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. 

The FCA urged firms to be clear about the credit file implications of any forms of support offered to borrowers.

Stakeholders are able to make comments on the draft guidance by 5pm on Tuesday 1st  September 2020.