The rules from the Financial Conduct Authority (FCA) that came into force yesterday (4 November) mean credit and mortgage providers have to provide better support to customers, including more options to postpone a payment.
Lenders now need to provide more money guidance and debt advice to customers who could be struggling to make their repayments.
Customers at risk of payment difficulty will also be better protected, with the same treatment given to those who could potentially miss a payment as to those who have already missed one.
There will also be more consideration of borrowers’ individual circumstances when a payment plan is implemented, which is already required for mortgage holders.
Some requirements include the waiving or cancellation of further interest charges so the level of debt that someone has doesn’t increase. It has also asked firms to develop data models so they can monitor overdraft usage and then provide support or suggestions for how account holders can manage the levels better.
Mind over mortgages: why we need to look after intermediaries’ mental health
Sponsored by Halifax Intermediaries
The changes to the expectations of firms incorporate the regulator’s Covid-19 rules, known as the Tailored Support Guidance, which helped customers who were financially worse off during the pandemic.
Where firms haven’t met the expectations of the FCA, there have been fines totalling nearly £60m for 270,000 affected customers.
The regulations come 18 months after the consultation into protecting people in financial difficulty launched in May 2023, which led to the policy confirmation in April 2024.
In the three years to January 2024, almost three million adults sought help from a lender, debt adviser or other financial support charity because they found themselves in financial difficulty.
The regulator noted that almost half (47%) of those who received help said they were in a better position as a result.
This article is based on one that was first published on Mortgage Solutions‘ sister site, YourMoney.com. Read: New rules from regulator aim to better protect borrowers in financial difficulty
