We are consulting on proposed changes to our requirements for firms when dealing with customers experiencing a payment shortfall.
Why are we consulting on this?
The rules set out in MCOB chapter 12 are designed to ensure that firms do not impose unfair or excessive charges. In particular, MCOB 12.4.1BR sets out how we expect firms to allocate payments received from customers who are experiencing a payment shortfall. The rule aims to ensure that payments are allocated in a way that minimises the time taken to pay off the arrears and thus reduces the amount paid in related fees and charges.
We have recently reviewed a number of firms’ allocation of payments processes. As a result, we believe it would be helpful to amend MCOB 12.4.1BR and the Glossary definition of ‘payment shortfall’ to clarify our expectations and to help ensure an appropriate level of consumer protection.
CP16/16: Minor Handbook changes related to mortgage borrowers with a payment shortfall (PDF)
Who is this paper aimed at?
This paper will be of interest to any firm currently administering mortgages and trade bodies for these firms. We would also expect interest from those who supply services to firms. This paper may be of interest to consumers who either have a mortgage or anticipate getting one, as well as consumer groups. In particular, it will be of interest to consumers who have experienced, or are experiencing, payment difficulties with their mortgage.
Next steps
Please send us your comments by 10 August 2016 by using our online response form.
We will publish feedback on responses and issue a Policy Statement once we have reviewed your comments.