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28 August, 2020 Open access

FCA proposals to protect mortgage holders beyond 31 October 2020 ‘do not go far enough’, says Money Advice Trust

Debt charity calls for regulator to continue specific protections, including payment deferrals in some circumstances, and for government reform of Support for Mortgage Interest scheme

Financial Conduct Authority (FCA) proposals to protect mortgage holders beyond 31 October 2020 'do not go far enough', according to the Money Advice Trust.

Commenting on the FCA's draft guidance for mortgage lenders for the period after 31 October 2020 (when the current guidance will expire), the Money Advice Trust says that, while it welcomes the FCA’s recognition that some customers will continue to face financial difficulty and uncertainty beyond 31 October, the proposals 'do not go far enough' to protect many struggling households from repossession when the current guidance ends.

In particular, Money Advice Trust Director of External Affairs Jane Tully says that -

'The regulator could go further by requiring lenders to continue offering specific protections to customers impacted by the outbreak – including requiring firms to offer further targeted payment deferrals as ‘forbearance of last resort’ in some circumstances.'

However, acknowledging that there is a limit to what the FCA and lenders can do to prevent repossessions, Ms Tully adds that the government also needs to 'step up' to close gaps in the mortgage safety net, for example by -

'... reforming the Support for Mortgage Interest scheme - including reducing the 39 week wait for payments to 13 weeks, and increasing the £200,000 mortgage cap that was set 11 years ago and has not been updated since.'

For more information, see FCA’s proposals 'may not be enough' to prevent serious mortgage difficulty beyond October from moneyadvicetrust.org