APPG asks FCA to review mortgages guidance to protect those suffering from the second wave of Covid
The APPG on mortgage prisoners has written to Nikhil Rathi, CEO of the FCA, calling for a review of its guidance on mortgages and the coronavirus
Seema Malhotra MP, Co-Chair of the APPG on mortgage prisoners said: "Since the FCA finalised its guidance on mortgages and the coronavirus we have seen the start of the second wave of the pandemic and the introduction of new local alert levels and lockdowns. The feedback from mortgage prisoners trapped on high SVRs and facing the income uncertainty particularly under Tier 2 and Tier 3 restrictions is very worrying. It is important that the FCA review its mortgages guidance in light of the second wave to better protect those suffering financially, to allow people in the higher alert areas to apply for payment holidays and to prevent repossessions."
A copy of the letter is available here
Informed by our engagement with mortgage prisoners, the APPG considers that the review of the guidance should introduce the following changes:
The FCA should be more prescriptive about the forbearance options which should be offered by lenders to customers.
The offer of a temporary 3 month payment holiday should be extended to all customers in Tier 2 and Tier 3 areas if they are suffering from financial difficulties due to the coronavirus and the local restrictions. This extension will enable those with existing payment holidays which finish soon to extend them and also help those whose income might have recovered during August and September to apply for another payment holiday if they experience new difficulties.
An urgent reconsideration of the lifting of the ban on repossessions in Tier 2 and Tier 3 areas and putting a further restriction in place for a time after a local area moves back into Tier 1. A strong message from mortgage prisoners has been that there should be no repossessions at all until the Spring.
All customers given a right to request a temporary switch to interest-only payments for a period of up to 12 months. Any customer taking advantage of this should not be classified as being in arrears.
All customers given a right to request an extension to the term of their mortgage for a defined period (such as a term extension of 1-5 years) without having to go through an affordability assessment.