Regulatory Alerts2016-10-18
Added · Updated
FG17/4: The fair treatment of mortgage customers in payment shortfall: impact of automatic capitalisations
Residential mortgage lenders and administrators must review whether they automatically included payment shortfall balances in contractual monthly instalment calculations since 25 June 2010 and provide remediation for affected customers. The guidance establishes a framework requiring reconstitution of mortgage accounts where automatic capitalisation resulted in an additional monthly payment greater than £10, while accounts with increases of £10 or less require only a recalculation excluding the shortfall. Firms must conclude all remediation programmes by 30 June 2018 and update credit reference agency records to reflect corrected payment histories. Compensation for identified losses includes refunds of incorrectly charged fees and interest, plus simple interest at 8% per annum on excess payments.