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FCA’s proposals “may not be enough” to prevent serious mortgage difficulty beyond October

​26 August 2020


Money Advice Trust responds to FCA’s proposed guidance for mortgage lenders supporting customers beyond 31st October

The Money Advice Trust, the charity that runs National Debtline, has welcomed the FCA’s clear recognition in today’s proposed guidance for mortgage lenders that some customers will continue to face financial difficulty and uncertainty beyond the 31st October, but warns that the proposals do not go far enough to protect many struggling households from repossession when the current guidance ends.

Jane Tully, Director of External Affairs at the Money Advice Trust, the charity that runs National Debtline and Business Debtline, said:

“Today’s FCA guidance on mortgages recognises that the longer-term financial consequences of Covid-19 are likely to see many mortgage holders struggle to make ends meet far beyond the 31st October.

The FCA is right to emphasise the need for specific protections for these households, including preventing firms from repossessing in cases where mortgage arrears were incurred solely a result of coronavirus payment deferral.  However, this guidance may not be enough to prevent serious mortgage difficulty for many. 

The regulator could go further by requiring lenders to continue offering specific protections to customers impacted by the outbreak – including requiring firms to offer further targeted payment deferrals as ‘forbearance of last resort’ in some circumstances.  Ultimately, however, under our current system there is a limit to what the FCA and lenders can do, on their own, to prevent repossessions.

“The Government needs to step up by closing the gaps in the mortgage safety net by reforming the Support for Mortgage Interest scheme – including reducing the 39 week wait for payments to13 weeks, and increasing the £200,000 mortgage cap that was set 11 years ago and has not been updated since.”

 
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