Following a consultation period which closed on 5 November 2020, the Financial Conduct Authority (FCA) has published the finalised version of its updated guidance for mortgage lenders on payment deferrals, as well as on tailored support.
The guidance comes into force on 20 November 2020. As anticipated from the draft guidance published earlier in the month, the guidance for lenders is that customers are eligible for payment deferrals for up to a maximum of 6 months. Those who have already been granted a deferral of shorter duration may ‘top-up’ to 6 months in total at most, and those who have not benefited from a deferral heretofore may request one up until 31 March 2021. Customers who have already deferred payments by 6 months may not avail themselves of any further deferrals, but instead lenders are expected to provide them with tailored support. Whilst payment deferrals will not be reported on a credit file as missed payments, tailored support may feature on the credit file. Either of these measures may affect the customer’s future ability to borrow.
Existing deferrals may be extended until 31 July 2021, so long as these extensions cover consecutive payments, and abide by the 6-month cap. This means that borrowers who wish to request a full 6 months are advised to apply in good time prior to their February 2021 monthly payment falling due.
The guidance on payment deferrals expires on 31 July 2021. The guidance on tailored support remains applicable thereafter, to those whose payment deferrals have come to an end and whose financial situation is affected by coronavirus after 31 March 2021.
The FCA has also confirmed that nobody should be evicted without their agreement until after 31 January 2021. Evictions prior to this date will therefore be uncommon, and likely only in circumstances where the borrower has already vacated the property or arranged for alternative accommodation after the eviction date.
Possession proceedings, however, may continue or commence, including the obtaining of a possession order. Since the expiry of the stay on possession proceedings, the courts have begun to list and conduct both Review, and thereafter, Substantive Hearings. Whilst the courts have been granting possession orders, the current prohibition on a considerable number of evictions – due to the Public Health (Coronavirus) (Protection from Eviction and Taking Control of Goods) (England) Regulations 2020 – is precluding their enforceability until January 2021 at the earliest.