Guidance for firms supporting borrowers with the cost of living
In March 2023, the FCA issued its guidance for firms supporting existing mortgage borrowers impacted by rising living costs.
1 Finalised guidance comes into effect from 4 November 2024.
The guidance set out the flexibility firms have when providing forbearance to those who need it, and the scope firms have to vary contract terms for other borrowers who want to reduce their monthly payments.
It advises that ’It should be read alongside the Mortgage Conduct of Business Sourcebook (MCOB) the Tailored Support Guidance (TSG), Guidance for firms on the fair treatment of vulnerable customers and the June 2022 Dear CEO letter which confirm our expectations of firms’.
It covers areas such as:
•providing forbearance;
•contract variations for the purposes of forbearance;
•implications of forbearance arrangements;
•customers not requiring forbearance – but wanting to reduce their monthly payments (contract variations);
•interest rate switches;
•term extensions;
•variation to interest-only mortgages;
•exceptions to the requirement to provide advice.