Temporary regulatory forbearance on MCOB 7.6.28R

The Financial Conduct Authority, FCA, has published a press statement in view of the new Mortgage Charter which may be viewed as a form of a „Code of Conduct“ in that it outlines a set of standards participating institutions (banks, building societies, other mortgage lenders) have committed to in order to assist residential mortgage borrowers who are or will be affected by high interest rates in their loan arrangements.
Among other things, the Charter allows customers who are up-to-date with their mortgage payments to switch to interest-only payments for six months or extend their mortgage term to reduce monthly payments. Latter option is accompanied by the possibility to revert to the original terms of the loan arrangements within six months. Customers who want to take advantage of the beforementioned options do not have to undergo a new affordability check or fear corrections to their credit scores.
Current FCA rule MCOB 7.6.28R requires mortgage lenders to provide „personalized information“ to customers before any changes are made to the payment terms of a mortgage contract. In view of the urgency of matter and the desparate need for supporting customers, the FCA notes that lenders whose systems may not be ready to produce the „personalized information“ should offer as much information as possible in a durable medium. This information should contain an explanation as to the implications and risks associated with an alteration of the payment terms.
Firms whose system are currently unable to provide all required information shall take prompt action and ensure compliance by the end of January 2024. The regulatory information rules remain in force during this period. However, the FCA intends to take a proportionate approach to assessment of firms‘ compliance so long as they are making reasonable efforts to provide as much disclosure as possible during that „transition“ time.