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In September, the FCA announced tailored support for borrowers affected by coronavirus (Covid-19) after 31 October, which it would keep under review as the pandemic evolved.

As a result of increasing restrictions announced in recent weeks, the FCA is proposing to enhance these measures to provide further support to consumers impacted by coronavirus.

What are the FCA’s proposals?

The FCA is proposing to extend the availability of payment deferrals to support borrowers who are experiencing payment difficulties because of coronavirus.

This will mean that:

• those who have not yet had a payment deferral will be eligible for 2 payment deferrals of up to 6 months in total
• those who currently have an initial payment deferral, will be eligible for another payment deferral of up to 3 months 
• those who have resumed repayments after an initial payment deferral will be eligible for another payment deferral of up to 3 months 

It’s important that borrowers who can afford to make repayments continue to do so.

The FCA is urging consumers not to contact their lender until the enhanced measures are in place. Lenders will soon provide further information.

Under the FCA’s proposals, borrowers would have until 31 January 2021 to request a payment deferral.

A payment deferral under these proposals would not be reported as missed payments on a borrower’s credit file. This does not mean that consumers’ ability to access credit will be unaffected in future, as lenders may take into account a range of information when making lending decisions.

The FCA is also proposing that no one will have their home repossessed without their agreement until after 31 January 2021.

Some borrowers would not be eligible for a payment deferral, including because they:

• have already had 2 payment deferrals (of up to 6 months in total), and tailored support will be more appropriate to their circumstances
• have agreed alternative support with their lender 

Tailored support may be reported on a borrower’s credit file, and lenders should inform borrowers where this will be the case.

Sheldon Mills, interim Executive Director of Strategy and Competition at the FCA yesterday said:

“We are working with lenders to ensure enhanced support remains available to borrowers struggling financially following changes in the coronavirus situation across the UK.

“Tailored support will still be offered and remains the most appropriate option for many borrowers, but we are proposing to extend payment deferrals for additional support. We also want to make sure no one has their home repossessed during this time.

“It is in borrowers’ own long-term interest only to take a payment deferral when absolutely necessary. Those that are able to keep paying, should do so. This allows support to be targeted to those most in need.

“We are also asking borrowers not to contact their lender yet, and instead wait for further updates, including from their lenders, soon.”

The FCA is asking for comment on the proposals by 10am on Thursday 5 November, with the final guidance published as soon as possible after the comment period closes.

The FCA is working closely with trade bodies and lenders to make sure the enhanced measures come into effect as soon as possible, and consumers receive the information they need.

The FCA will continue to keep the support available to consumers under review.

Notes to Editors

1. Draft guidance on mortgages
2. Under our March guidance borrowers could receive a payment deferral of up to 3 months
3. In our June guidance we extended this allow a further 3 month deferral, which meant that borrowers could extend an existing deferral or make 2 separate deferrals requests of 3 months each before 31 October 2020. 
4. Our proposals would reopen the payment deferral application window that expired on 31 October 2020 
5. Under our proposals, no borrower will receive more than 2 payment deferrals of up to 6 months in total, even where one or both of these are shorter than 3 months
6. Our September guidance will continue in place to provide tailored support for those who will not be eligible for further payment deferrals under our proposals.
7. For more information on the tailored support that is available, see our September guidance or press release