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Lenders warned over support for mortgage customers in financial difficulty

Written by: Lana Clements
The Financial Conduct Authority (FCA) has warned that many lenders are taking an automated approach to borrowers in financial difficulties following the end of mortgage payment holidays, and it will intervene if customers suffer.

The “sheer number” of borrowers that might need help in the coming weeks has led many banks and building societies to deploy technological solutions to deal with this “significant challenge”, the regulator noted.

But it emphasised that lenders must still be able to identify customer vulnerabilities and prioritise support for those most at risk.

Jonathan Davidson, executive director of supervision – retail and authorisations at the FCA, said the approach was “more automated than we would usually see for mortgage borrowers in payment difficulties”.

But he stressed that “it remains as important as ever to deliver outcomes that are right for the individual borrowers – rather than adopting “one size fits all’ solutions” and more hands-on support must be available for those who need it.

In a speech at the Mortgage Forbearance Webinar, Davidson highlighted that clear communication was vital and lenders should be able to identify and act on customer vulnerability.

He said most mortgage borrowers who took deferrals were now resuming payments, however there will be a “significant minority of customers who will face ongoing difficulties through this unprecedented period”.

Lenders must prioritise support for customers most at risk of harm, or those who face the greatest financial difficulties, he added.

Supporting staff will help customers

It is expected that borrowers finances will be hit in different ways and at different times so lenders were told solutions may need to be reviewed regularly.

Davidson sympathised with the current operational challenges of lenders but stressed that staff must be well resourced and supported so that “in turn customers are treated well”.

The webinars were part of the regulator’s help to prepare firms for the next phase of supporting mortgage customers facing payment difficulties as a result of coronavirus.

Davidson said the regulator will be looking at how lenders adapt to the challenges, and the outcomes received by consumers.

He added: “If we see significant issues, we will intervene.

“But we understand that this is a difficult environment, so where it is evident that firms are trying to do the right thing we want to be able to work with you to ensure that issues are resolved.”

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