The Mortgages Tailored Support Guidance was introduced as borrowers were transitioned off payment deferrals on to more tailored forbearance. It was successful in ensuring borrowers received appropriate support during the height of the pandemic. The guidance was further utilised as we moved into a time of economic pressure caused by high inflation. Given that this guidance is temporary we are supportive of FCA’s intent to embed relevant sections into the handbook.

These new proposals look to introduce “payment shortfall” into the scope of MCOB 13. Whilst we agree with the intent to support early/pre–arrears borrowers per the Tailored Support Guidance, these proposals fail to recognise that not all payment shortfalls are a sign of financial difficulty. Rule change rather than guidance restricts a firm’s ability to communicate with each individual customer at the right time in the right way. This will potentially affect the customer experience and outcome without reasonable justification.

The new Consumer Duty is now in live. Consumer Support and Consumer Understanding form key elements of this new duty. Our members have been carefully reviewing their customer communications to ensure they meet the requirements of the Duty. Overlaying prescriptive rules for shortfall letters removes the flexibility for firms to be more nuanced in their approach in order to best serve their borrowers.

See here for our full response.