The FCA has published finalised guidance confirming that from 1 April 2021, firms may enforce repossessions. This is subject to any relevant government restrictions on repossessions and firms must act in accordance with the TSG, chapter 13 of the Mortgages and Home Finance: Conduct of Business sourcebook (MCOB 13) and relevant regulatory and legislative requirements.
The TSG aims to ensure that mortgage customers whose homes may be repossessed are treated fairly and appropriately. Firms must have appropriate policies and procedures for the fair treatment of vulnerable customers. They must consider risks of harm to vulnerable customers and consider where repossession would place a customer (or member of their household) at a greater risk of harm from Covid-19. Where risk is present, repossession should not be enforced until those risks have passed or can be appropriately managed.
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.
Section 7 (Repossessions) of this TSG comes into effect from 29 March 2021 and sets out expectations for repossessions from 1 April 2021. The original guidance came into force 16 September 2020 and will remain in force until varied or revoked.
The FCA has also published a Feedback Statement (FS21/6) summarising the feedback received from its consultation on the guidance earlier this month. The updated guidance is unchanged from that proposed in the consultation.
Coronavirus linked forbearance: key findings
The regulator found firms have progressed well in implementing the initial TSG and have acted quickly to build their capacity to support consumers. It also highlights some areas for improvement, which firms are expected to address. Key findings from the report include:
- Customers, in general, have been able to get support as they exit payment deferrals.
- All firms had vulnerable customer policies in place. Notably, 94% of mortgage firms and 64% of credit firms reviewed or added to such policies in light of the pandemic.
- No systemic issues were identified with the firms’ ability to meet the demand from customers seeking further help.
- 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 all staff are adequately trained and have appropriate oversight of new staff.
- Many firms use automated approaches to the customer forbearance journey which can be helpful to customers. Further enhancement to some of the digital processes seen would be beneficial, for example clear signposting of non-digital support.
Firms should review the FCA’s findings and assure themselves that they have embedded and implemented the TSG within the firm. The FCA intends to complete further work to understand how firms have done this over the coming months.
By following the guidance, firms should be able to ensure that customers receive fair and appropriate outcomes and that the solutions provided meet customers’ developing and longer term personal and financial circumstances.
Where the FCA identifies concerns with a firms’ approach, it will follow up through the usual course of its supervisory work, taking robust action to stop and prevent harm.
Article co-authored by Anna Burdzy.