Regulatory Alerts2016-12-13
Home Finance Customers with a Payment Shortfall: PS16/25
The Financial Conduct Authority issued Policy Statement PS16/25 to implement clarifying amendments to its Handbook rules governing how mortgage and Home Purchase Plan firms allocate payments from customers experiencing a payment shortfall. The revised regulations require lenders to prioritize reducing the principal shortfall balance over paying non-capitalised interest or shortfall-related charges, while simultaneously refining the regulatory definition of a payment shortfall to explicitly exclude capitalised amounts and ancillary fees. Incorporated after industry consultation, these adjustments aim to minimize unnecessary compliance costs for firms while ensuring consumers benefit from faster arrears reduction and lower associated fees, with the rules taking effect on 15 December 2016.