Lenders to pay out £47m to borrowers struggling financially

Among the issues it identified included not adequately tailoring support to individual circumstances, failing to respond appropriately to customers with characteristics of vulnerability, and not effectively engaging with customers about money guidance and debt advice.  

Alongside securing the £47m worth of redress from 17 of the almost 100 lenders it worked with for its investigation, the FCA is proposing to make permanent requirements on lenders to support borrowers in difficulty.  

These include providing the right support to customers struggling to make repayments, ensuring repayment arrangements are appropriate, and that they’re signposting customers to free and impartial money guidance and debt advice.  

It’s also said lenders should not charge arrears fees that are higher than necessary to recover firms’ reasonable costs for consumer credit customers, and that they should consider the overall impact of support arrangements on mortgage balances.  

The FCA’s executive director of consumers and competition Sheldon Mills said: “Many firms have been following our temporary guidance, developed during the pandemic, to support borrowers in tough times. Our proposals today will help ensure this continues.  

“Where we see firms not providing the right support, we will act quickly to put this right. Firms are already paying up to £47m in compensation for not providing appropriate support to borrowers.  

“If you’re worried about keeping up with payments, we encourage you to talk to your lender as soon as possible.” 

The regulator has launched a consultation on these proposals, which will be open until 13 July – with the FCA expecting the new rules to come into force in the first half of 2024.