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FCA: “No widespread harm” from long-term mortgage arrears

While the Financial Conduct Authority (FCA) has “not identified widespread harm” to customers from extended forbearance, it has found inconsistencies in firms’ arrears management practices.

That is the outcome from the regulator’s probe into whether customers with long-term mortgage arrears were experiencing harm from extended forbearance.


Examples of harm could include forbearance arrangements which were unaffordable, with severe consequences for the overall financial situation of customers, or where the debt continues to grow. It could also ultimately result in a repossession with considerably reduced equity in their homes.


The FCA said its work was undertaken against a “backdrop of low interest rates where the interest on arrears balances was relatively low”. It added that it is important that customers who are already in long-term arrears, and mortgage customers who might go into arrears with an increase in interest rates or a change to their personal circumstances, are “aware of what actions they should be taking”.

It said customers should:

  • Speak to their mortgage provider at the first sign of financial difficulty, or a change in circumstances, so they can discuss their circumstances together and identify potential solutions.
  • Not delay or ignore the situation – speaking with their mortgage provider early may prevent the situation from worsening as their provider may be able to discuss a wider range of options. This may also give them more time to make a difference.
  • Seek additional support and free, independent guidance from organisations such as the Money Advice Service.

Jonathan Davidson, FCA executive director of supervision, said: “We know that many customers remain hesitant to contact their lender to discuss their mortgage arrears for a variety of reasons. We encourage customers to talk to their lender as early as possible as this may give them more time and options when it comes to the steps they can take.”


The FCA also provided the feedback to firms included in its sample and is considering where in some cases further regulatory action in necessary. Under the FCA’s rules, firms may only consider repossession as a last resort.

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