As the deadline to apply for a payment deferral ends on 31 March 2021, the FCA wants to reassure consumers in financial difficulty that support will continue to be available under the Tailored Support Guidance (TSG).
Payment deferrals allowed firms to deal with unprecedented demand for short-term support very quickly. As the crisis evolves and demand for payments deferrals reduces, tailored support provides a longer-term framework for firms to offer a wider range of options which are tailored to a consumer’s individual needs and circumstances.
The FCA has published finalised guidance for firms, to ensure that mortgage customers whose homes may be repossessed are treated fairly and appropriately, particularly where there are risks of harm to customers who are vulnerable, including as a result of coronavirus.
This means that firms considering or taking repossession action should only do so as a last resort and when all other reasonable attempts to resolve the situation have failed. Firms should also take additional care when taking action to enforce repossession if their customer would be at greater risk of harm from coronavirus if made to vacate the property. This will provide protection for customers when government restrictions, which prevent firms from enforcing repossession in certain parts of the UK, end - or where they do not apply.
Sheldon Mills, Executive Director, Consumers and Competition at the FCA, said: ‘As we move into the next phase of the pandemic, we want to reassure consumers that they will continue to receive fair and appropriate support. We encourage those in difficulty to contact their lender to discuss their options.
‘We’ve been monitoring how firms are providing support and found they have responded well to the challenge of providing tailored support, but there is more to do. We’ve set out where firms need to improve in a report on how they are implementing tailored support.’
The report, which focuses on firm’s capabilities to support consumers financially impacted by coronavirus, found that firms have progressed well in implementing the TSG and have acted quickly to build their capacity. However, it also highlights some areas for improvement, which firms are expected to address. The FCA will continue to monitor firms over the coming months.
The findings in the report, include:
- Consumers have generally been able to get support as they come to the end of a payment deferral. The FCA has not identified any systemic issues with firms' ability to meet the demand from customers seeking further help. The support identified in the report has typically been short term in nature given the uncertainty of customers’ financial circumstances during the pandemic.
- All firms assessed had vulnerable customer policies in place, and it was noted that 94% of mortgage firms and 64% of credit firms had reviewed or added to them in light of the pandemic. Firms are encouraged to review the recently published guidance on vulnerable consumers and to embed relevant aspects into their processes to ensure that vulnerable customers are treated fairly.
- Due to the pandemic, some firms anticipated an increase in demand from customers in financial difficulty and recruited more staff to address that demand. As a result, there has been a significant increase in inexperienced staff helping customers, which may lead to an increased risk of harm. Firms are expected to ensure that all staff are adequately trained and have appropriate oversight of new staff to ensure that the right support is provided to customers.
- Some firms have accelerated plans to automate aspects of the customer support journey. The FCA found that in general these automated approaches were easy to navigate with minimal steps and helpful menus for customers to select from. However, some firms could make some improvements, particularly around the ease of access to non-digital support.
In September 2020, the FCA published TSG covering mortgages and consumer credit, as well as additional overdrafts guidance. The FCA committed to review the credit TSG after 6 months, which was extended to include mortgages and overdrafts. The FCA has concluded that these pieces of guidance will continue to be relevant over the coming months, especially as the Payment Deferral Guidance comes to an end. The FCA will keep these pieces of guidance under review and will make changes if necessary.
Notes to editors
- Coronavirus linked forbearance: key findings
- The report is based on a review of firms’ policies and processes, as well as engagement with firms between 4 November 2020 and 25 February 2021
- The sample of firms in the report covered approximately 50% of the total mortgage and consumer credit market (by market share) and comprised 17 mortgage firms (both 1st and 2nd charge), 15 personal loan and credit card firms, 18 higher cost firms, 9 motor finance firms and 9 retail finance firms (including premium finance firms). A detailed assessment was completed of the automated part of the customer journey for 9 firms. A number of the 8 largest retail banks and building societies were also included within the sample.
- Finalised Guidance: Mortgages and coronavirus: further updated tailored support guidance for firms
- FS21/6: Coronavirus: Tailored Support Guidance (TSG) for firms – feedback on draft guidance on home repossessions & statement of ongoing relevance of TS
- Find out more information about the FCA.