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Mortgage payment holidays were first established earlier in the year to help those financially affected by COVID-19. The pandemic has undoubtedly taken a toll on the financial situation of many households, and support was offered until October 31. However, amid the news of a second lockdown, and ongoing issues surrounding the pandemic, the Financial Conduct Authority (FCA) has issued the latest guidance on the situation.
The watchdog has explained how it wishes lenders to approach the matter going forward, to provide as much support to Britons as possible.
The main proposal being put forward by the FCA is for those who have not yet had a payment holiday.
These individuals will be entitled to two payment deferrals of up to six months in total.
However, those who have already had this form of support will also be entitled to further assistance from their lender.
Britons who have already been helped by a payment holiday will be able to defer for another three months if necessary.
And individuals who have resumed their repayments after an initial deferral, will also be eligible to receive an additional payment holiday.
However, borrowers have been urged not to contact their lenders as of yet, as the additional measures are yet to be implemented.
It is expected lenders will provide extra information to those affected in due course.
These proposals put forward by the FCA will mean Britons have up until January 31, 2021 to request a payment deferral.
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This is likely to be good news for those who missed the October 31, 2020 deadline or households who would like further support.
For those who are worried about their credit score going forward, the FCA has also issued further guidance.
The proposals suggested would mean a payment holiday would not count on a borrower’s credit file.
However, this does not mean lenders cannot take this into consideration when making lending decisions in the future.
For those who have already had two payment deferrals, this extra support will not be available as tailored support is likely to be more suited to their circumstances.
In addition, some others may have already agreed a support plan with their lender, and will not be eligible for this formal support.
The FCA has said no one should have their home repossessed without their agreement until after January 31 2021.
Sheldon Mills, interim Executive Director of Strategy and Competition at the FCA, commented on the new proposals.
He 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 ale 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 now asking for comment on proposals from relevant parties by November 5 at 10am, with the final guidance set to be published as soon as possible after this comment period closes.
The FCA has said it will keep the support available to consumers under review, to help as much as possible.
Previously, the FCA said lenders should take a more tailored approach to customers going forward instead of a ‘one-size-fits-all’ attitude.
But if the proposals are adopted going forward, it will mean a higher level of formal support for those affected by COVID-19.
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