Britain’s financial watchdog requested a proposal making COVID-era temporary rules permanent by suggesting banks and building societies help customers who are struggling to repay mortgages and loans amid rising interest rates in the cost-of-living crisis.
As the COVID-19 pandemic spread throughout 2020 and the economy entered a lockdown, the Financial Conduct Authority issued provisional instructions to lenders of mortgages, consumer loans, and overdrafts.
In a public consultation paper released on Thursday, the FCA urged firms to take appropriate steps to support and guide all customers facing financial challenges, like providing debt-free advice.
FCA executive director for consumers and competition, Sheldon Mills, stated: “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.”
The FCA revealed last week that millions of Brits defaulted on their bills frequently in the last six months of January due to the steep surge in inflation and interest rates experienced in that period.
For failing to assist consumers in need, 17 lenders have agreed to pay up to 47 million pounds ($59.32 million) in compensation, according to the FCA, which represents over 195,000 customers.
According to the FCA, damages include failing to provide forbearance to consumers at risk of experiencing payment issues before they miss a payment, failing to communicate with customers effectively, and failing to customize forbearance options to suit specific needs.
The temporary guideline was made permanent after a public consultation that ended in July. According to the watchdog, the new regulations are anticipated to take effect in the second half of 2024.
- Published By Team Timeswire