Finalised Guidance: Mortgages and coronavirus: further updated tailored support guidance for firms

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Finalised guidance
Mortgages and Coronavirus: Tailored
Support Guidance
March 2021
This finalised guidance was revoked on 4 November 2024 and replaced by PS24/2:
Strengthening protections for borrowers in financial difficulty: Consumer credit and mortgages

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About this guidance
1.1 This guidance is an updated version of the FCA’s guidance “Mortgages and Coronavirus:
Additional Guidance for Firms”. This guidance applies in the exceptional circumstances arising out of the coronavirus pandemic (Covid-19) and its impact on the situation of mortgage customers. It is not intended to have any relevance in circumstances other than those related to coronavirus.
1.2 This guidance originally came into force on 16 September 2020, was updated on 16
November 2020 with effect from 20 November 2020 and remains in force until varied or revoked. Guidance is relevant to firm behaviour only to the extent it is current at the time of the behaviour in question. Section 7 was updated on 27 January 2021 with effect from 29 January 2021. Section 7 was further updated on 25 March 2021 with effect from 29 March 2021 to set out our expectations in respect of repossessions from 1 April 2021.
1.3 This guidance supplements our temporary guidance, first made in March 2020 and
subsequently updated in June and November 2020, the current version of which is ‘Mortgages and coronavirus: Payment Deferral Guidance’ (that guidance, as varied from time to time, is referred to in this guidance as the “Payment Deferral Guidance”)
1.4 The Payment Deferral Guidance provides for exceptional and immediate support to mortgage
customers facing temporary payment difficulties due to circumstances related to coronavirus. Under that guidance, eligible customers may defer up to six monthly payments, provided that the last deferral relates to payments falling due no later than July 2021.
1.5 Where a customer indicates that they may be experiencing, or they reasonably expect to
experience, payment difficulties as a result of circumstances relating to coronavirus, a firm should offer any support the customer is eligible for under the Payment Deferral Guidance before providing support under this Tailored Support Guidance.
1.6 This Tailored Support Guidance applies to firms dealing with customers facing payment
difficulties due to circumstances related to coronavirus who are not receiving payment deferrals under the Payment Deferral Guidance, including where they are not or are no longer eligible for payment deferral. Section 7 (Repossessions) applies more widely to all customers.
1.7 This guidance is designed to enable firms to continue to deliver short and long-term support
to customers affected by the evolving coronavirus pandemic and the Government’s response to it. It is intended to support firms to treat consumers affected by coronavirus fairly and to help consumers to bridge the crisis to get back to a more stable financial position.
1.8 That support could include the provision of further payment deferrals where appropriate,
where firms agree to accept reduced or no payments for further periods without changing the contractual terms. These payment deferrals would not be subject to the Payment Deferral Guidance but would be provided as a form of tailored support under this guidance.

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Payment deferrals provided in these circumstances should therefore be reported to credit files in accordance with usual reporting processes as set out in Section 4.
1.9 We will keep this guidance and the Payment Deferral Guidance under review as the wider
situation develops. We will consider publishing further guidance or making rules if appropriate.
1.10 In line with the standards we always expect from firms, we want firms to deliver the
following outcomes:

• Customers receive appropriate forbearance that is in their interests after consideration of
  their individual circumstances.
• Firms support their customers through a period of payment difficulties and uncertainty,
  including by considering their other debts and essential living costs.
• Firms recognise vulnerability and respond to the particular needs of vulnerable
  customers.
• Firms have systems, processes and adequately trained staff, with any staff incentives
  aligned with providing their customers with the help they need.
• Customers should receive the support they need in managing their finances, including
  through self-help and money guidance. Firms should signpost or refer them to debt advice if this meets their needs and circumstances.
  1.11 The table below summarises the structure of this guidance:
  Section 2 (Mortgages and
  Coronavirus) sets out more detailed provisions about the scope of this guidance, as well as our general approach to firms’ use of automation or digital tools in implementing this guidance and under MCOB 13
  Section 3 (dealing with
  customers at the end of a payment deferral period) sets out how firms should deal with customers at the end of a payment deferral period where the customer is not continuing to receive support in accordance with the Payment Deferral Guidance. This includes guidance on when these customers may enter a payment shortfall, and how firms should deal with a payment shortfall arising in these circumstances.

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Section 4 (CRA Reporting) sets out our expectations of firms in relation to CRA
reporting when dealing with customers who have received support under the Payment Deferral Guidance and those who receive tailored support under this guidance
Section 5 (Tailored
Forbearance in the Current
Environment) sets out our expectations of firms when providing tailored forbearance to customers within the scope of this guidance
Section 6 (interaction with
other MCOB provisions) provides guidance on how certain MCOB provisions (other than MCOB 13) apply to customers within the scope of this guidance
Section 7 (Repossessions) provides guidance on how firms should approach
repossessions
Section 8 (Debt Help and
Money Guidance) provides guidance on how firms should support customers within the scope of this guidance to access appropriate sources of debt help and money guidance

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2 Mortgages and coronavirus
2.1 This guidance supplements the Payment Deferral Guidance. It applies to firms dealing with
customers experiencing payment difficulties due to circumstances arising out of coronavirus when they are not receiving support under the Payment Deferral Guidance. This includes customers who:

• Have had the maximum number of payment deferrals available to them under the
  Payment Deferral Guidance. This includes customers coming to the end of their ‘last’ deferral under that guidance.
• Experience payment difficulties as a result of circumstances relating to coronavirus
  after the Payment Deferral Guidance is no longer in force.
• Are eligible for a further payment deferral in accordance with the Payment Deferral
  Guidance but are currently receiving other agreed forbearance from their lender.
• Can resume contractual payments at the end of a payment deferral but do not
  capitalise or repay the deferred amounts.
  2.2 Where a firm dealt with customers at the end of a payment deferral period before this
  guidance originally came into force on 16 September 2020, it should review its approach to customers who are unable to resume payments. If its approach materially differs from this guidance, it should review whether the outcomes these customers received are consistent with what they would likely have received under this guidance.
  2.3 This guidance builds on:
• Principle 6 (‘A firm must pay due regard to the interests of its customers and treat
  them fairly’);
• Principle 7 (‘A firm must pay due regard to the information needs of its clients, and
  communicate information to them in a way which is clear, fair and not misleading’);
• MCOB 2.5A.1R (‘A firm must act honestly, fairly and professionally in accordance with
  the best interests of its customer’); and

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• MCOB 13 (Arrears, payment shortfalls and repossessions: regulated mortgage
  contracts and home purchase plans).
  2.4 This guidance is potentially relevant to FCA enforcement cases and we may take it into
  account when considering whether it could reasonably have been understood or predicted at the time that the relevant conduct fell below the standards required by these Principles and MCOB.
  2.5 A firm is likely to contravene these rules if it acts in a manner which is inconsistent with this
  guidance.
  2.6 Where an authorised person carries on activity in relation to an unregulated agreement to
  provide credit which is secured on land (such as an investment property loan under article 61A of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001), its conduct in relation to the subject-matter of this guidance could be relevant to our assessment of whether it is satisfying the Threshold Conditions.
  2.7 Where there has been an assignment of the rights under the mortgage contract to a non￾authorised person, the person must still comply with general consumer protection law. This
  includes the Consumer Protection from Unfair Trading Regulations 2008. Under these regulations, a commercial practice may be unfair if, among other things, it contravenes the requirements of professional diligence. Professional diligence means the standard of special skill and care which a trader may reasonably be expected to exercise towards consumers. The guidance below is intended to describe the standards of skill and care we consider may reasonably be expected of lenders in the mortgages market in the current exceptional circumstances of coronavirus. If, therefore, a lender does not follow this guidance, that could call into question whether it is meeting the requirements of the 2008 Regulations, even if the lender is not regulated under FSMA.
  2.8 Under this guidance and our forbearance rules in MCOB 13 firms have flexibility and scope to
  tailor their approach to meet the challenge of many customers needing help at the same time.
  2.9 In particular, neither this guidance nor MCOB 13 impose prescriptive requirements about
  how a firm collects information about a customer’s individual financial circumstances or how it ensures any forbearance option proposed is appropriate for that customer given their individual circumstances. Therefore, firms could use automation or digital tools to:
• automate processes, including asking borrowers who cannot resume full payments to
  provide information on their circumstances, including income and expenditure;
• offer a customer a forbearance option the firm has identified as appropriate to the
  customer’s individual circumstances, and get the customer’s agreement to it;

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• offer a customer a range of options that the firm has identified as appropriate to the
  customer’s individual circumstances for the customer to choose from.
  2.10 Firms are responsible for ensuring that all customers get fair and appropriate outcomes and
  should have appropriate systems and controls to ensure compliance with this guidance and MCOB 13, even when using automation or digital tools in this way.
  2.11 Where a firm offers forbearance through a digital channel, it should ensure that customers
  can ask for support through a non-digital channel if they want it.
  2.12 If customers are unable to reach timely agreement with firms for appropriate forbearance
  due to firms’ operational difficulties and subsequently miss a payment, firms should work with the customer to put them in the position they would have been in, had they received timely forbearance. Firms should ensure they do not charge default or arrears charges as a result. They should work with customers and Credit Reference Agencies (CRAs) to ensure that any necessary rectifications are made to credit files so that no worsening status is recorded in respect of this period.
  2.13 If you have any questions or concerns about this guidance, please contact us.

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3 Dealing with customers at the end of a payment deferral period
3.1 This section sets out how firms should deal with customers at the end of a payment deferral
granted under the Payment Deferral guidance, where the customer is not continuing to receive support under the Payment Deferral Guidance. It sets out when a customer should be treated as in payment shortfall at the end of a payment deferral period and how firms should treat payment shortfalls arising in these circumstances.
3.2 The Payment Deferral guidance states that a firm should contact customers in good time
before the end of a payment deferral period. The firm should give them information about the resumption of payments and on how to get further support if needed.
3.3 If the customer indicates that they continue, or reasonably expect to continue, to face
payment difficulties, the firm should treat the customer fairly. It should work with the customer to resolve these difficulties before payments are missed, in line with the rest of this section and section 5 below. Unless the customer objects, the firm may capitalise the deferred amounts.
3.4 Customers with ongoing payment difficulties will have a range of needs and circumstances.
Some will be facing financial difficulty for the first time and others will have seen their existing difficulties continue or get worse. Many who have taken payment deferrals will still be in temporary payment difficulty. And some will be in longer term difficulty.
3.5 We recognise that, given the large number of customers whose payment deferrals under the
Payment Deferral Guidance have ended or will be ending by 31 July 2021, firms may want to offer forms of short term support that they consider are broadly appropriate for certain types of customer. This may mean firms acting on more limited information from customers than they would otherwise gather when assessing the appropriateness of forbearance options under MCOB 13.
3.6 Firms can offer forbearance in this way, under this guidance, provided they review it in
accordance with the requirements of MCOB 13, within 60 days of agreeing it. Firms should offer customers the option of requesting access to a full range of support based on an assessment of their individual circumstances.
3.7 This approach will not be suitable for all customers in financial difficulty. Firms should take
steps to identify those customers for whom this approach is not suitable, because they

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• have a payment shortfall;
• have only a short term remaining on their mortgage and no or limited scope to
  extend);
• are unemployed, or have seen a significant loss of earnings;
• have high levels of overall debt or are having problems with their debt; or
• for whom short term support is unlikely to be appropriate.
  3.8 Where a firm wants to offer forbearance options in this way it must have a written policy
  setting out:
• The range of forbearance options it proposes to offer in this way, and how it will direct
  customers to particular options.
• The types of customers for whom this approach is suitable. The policy should also
  explain the basis for its assessment that the further temporary support these customers will receive is likely to be appropriate for them.
• How the firm will identify those customers for whom this approach is not suitable,
  because they require a full assessment of their individual circumstances promptly. The policy should also set out how the firm will ensure these customers receive forbearance that is appropriate to their individual circumstances. When MCOB 13 applies
  3.9 Under the Payment Deferral guidance, customers should not be considered to be in payment
  shortfall during a payment deferral period.
  3.10 At the end of the payment deferral period, there will be no payment shortfall for the
  purposes of MCOB 13, where the accrued amounts are repaid before the next payment is due. This could include where the sums are:
• repaid in a lump sum; or
• capitalised, whether by default or as part of the support agreed with the customer to
  resolve their payment difficulties, including where the term is extended.

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3.11 In all other cases, firms should regard the deferred sums as a payment shortfall under MCOB
13 once the next payment falls due. This is to ensure that high standards of consumer protection continue to apply. In these circumstances, the firm should:

• Clearly communicate, as part of their engagement with the customer before the end
  of the payment deferral, including in writing, that future communications about payment shortfalls or arrears will include the deferred amounts but in line with the Payment Deferral guidance and paragraph 4.3 below, it has not reported any worsening status to their credit file because of the amounts being included in their payment shortfall or arrears.
• Keep a record of the amount added to the shortfall because of any payment deferrals
  (‘the deferral shortfall’), to ensure the firm can identify the unique circumstances in which this shortfall arose.
• Make reasonable efforts to reach an agreement with the customer to pay back the
  shortfall as part of the wider forbearance the firm offers in accordance with MCOB 13.
• In considering whether and when it will take steps to repossess the property and
  whether all other reasonable attempts to resolve the position have failed, it should treat customers fairly and (in addition to having regard to the guidance in Section 7) take into account that:
  o the shortfall arose by agreement between the customer and the firm and in exceptional circumstances; and o the customer was not expected to address the shortfall during the payment deferral period and so may have had less time to do so.
• Unless the customer is unreasonably refusing to engage with the firm in relation to
  addressing the shortfall a firm should not repossess without the customer’s consent solely because of a deferral shortfall.
  3.12 Firms should ensure their arrears and repossession policy (required by MCOB 13.3.1R(2))
  specifically addresses payment shortfalls arising in these circumstances.
  3.13 Where, after the end of a payment deferral period under the Payment Deferral Guidance, a
  firm agrees to the customer making no or reduced payments for a further period (without changing the sums due under the contract) this will cause a payment shortfall that will be subject to MCOB 13.

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4 Credit Reference Agency (CRA) reporting
4.1 This section sets out our expectations of firms for CRA reporting when dealing with
customers who previously received one or more payment deferrals under the Payment Deferral Guidance and those who receive tailored support under this guidance.
4.2 We expect firms to resume normal CRA reporting at the end of payment deferral periods
taken under the Payment Deferral Guidance, subject to the principles set out below.
4.3 We expect firms to resume normal reporting from the payment status that was ‘frozen’ at
the start of the payment deferral period to preserve the benefit of having no worsening status reported during payment deferral periods. This reflects the updated Coronavirus Data Reporting Guidance, issued by the CRAs in consultation with the Steering Committee on Reciprocity (SCOR). This gives detailed reporting guidance for typical scenarios at the end of payment deferrals.
4.4 Where a mechanism to repay accrued amounts is agreed at the end of a payment deferral
period and the customer can resume at least the level of contractual payments, we would not expect this to result in the reporting of an arrangement to credit files (subject to subsequent payment performance being reported in the usual manner).
4.5 Where customers are unable to reach timely agreement with firms for appropriate
forbearance after a payment deferral granted under the Payment Deferral guidance due to firms’ operational difficulties and subsequently miss a payment which is reported to their credit file, we would expect firms to work with customers and CRAs to ensure that any necessary rectifications are made to credit files so that no worsening status is recorded in respect of this period. We would not typically expect this period to relate to more than a single monthly payment.
4.6 For all customers, we expect firms to report any further forms of support, whether or not it
follows after a payment deferral, to credit files in the usual way except where this would be inconsistent with paragraph 1.22 of the Payment Deferral Guidance. This includes, for example, where it agrees a payment deferral (without changing the sums due under the contract) otherwise than under the Payment Deferral guidance.
4.7 Firms should ensure that they are clear about the credit file implications of any forms of
support they offer customers, including rescheduling or refinancing of accounts.

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5 Tailored Support in the current environment
5.1 This guidance sets out our expectations of firms for providing forbearance (whether under
section 3 of this guidance or under MCOB 13) to customers within the scope of this guidance,
whether or not they have had payment deferrals under the Payment Deferral Guidance.
5.2 The pandemic and national and local responses will continue to evolve. Many customers will
continue to face uncertainty about their short and medium-term employment and income prospects. They may also experience temporary interruptions in income. Customers’ circumstances may change quickly, and in a way that might cause or increase vulnerabilities.
5.3 Firms should provide support to customers that reflects the uncertainties and challenges that
many customers are and will be experiencing due to coronavirus.
5.4 We expect firms to be flexible and employ a full range of short and long-term forbearance
options to support their customers and minimise avoidable financial distress and anxiety to customers in financial difficulty. This may include short-term arrangements where the firm allows the customer to make no or reduced payments for a specified period.
5.5 But we recognise it may be challenging to achieve this in the current environment, where it
is likely that many customers will require support. Firms may need to recruit extra and less￾experienced staff to meet the increased demands for forbearance and may be supporting them remotely.
5.6 In line with the standards we always expect from firms, we want firms to deliver the
following outcomes:

• Customers receive appropriate forbearance that is in their interests after
  consideration of their individual circumstances.
• Firms support their customers through a period of payment difficulties and
  uncertainty, including by considering their other debts and essential living costs.
• Firms recognise vulnerability and respond to the particular needs of vulnerable
  customers.

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• Firms have systems, processes and adequately trained staff, with any staff incentives
  aligned with providing their customers with the help they need.
• Customers should receive the support they need in managing their finances, including
  through self-help and money guidance. Firms should signpost or refer them to debt advice if this meets their needs and circumstances.
  5.7 This section builds on pre-existing outcomes of our work on managing mortgage arrears and
  applying forbearance. It is intended to support firms in delivering fair customer outcomes in the current exceptional circumstances. Engaging with customers seeking support before missing a payment
  5.8 The Payment Deferral guidance sets out that a firm should contact customers in good time
  before the end of a payment deferral period with information about resuming payments and how to access further support if needed.
  5.9 If the customer indicates that they continue, or reasonably expect to continue, to face
  payment difficulties, and is not eligible for a further payment deferral under the Payment Deferral Guidance, the firm should treat the customer fairly and work with them to resolve these difficulties before payments are missed, in accordance with the remainder of this
  section and section 3 above.
  5.10 More generally, when any customer experiencing or reasonably expecting to
  experience payment difficulties as a result of circumstances relating to coronavirus contacts a firm asking for support before missing a payment, we also expect firms to treat the customer fairly, in accordance with Principle 6. The firm should offer appropriate prospective forbearance to enable the customer to avoid, reduce or manage any payment shortfall that would otherwise arise. This should, in particular, include consideration of the range of forbearance tools set out in MCOB 13.3.4AR.
  5.11 By doing this firms can support customers in a way that minimises avoidable financial
  distress and anxiety when many customers may be experiencing uncertainty and economic shocks due to coronavirus. Considering a range of forbearance options
  5.12 Firms should not take a ‘one size fits all’ approach and a firm offering a single solution to all
  customers is unlikely be consistent with this guidance, or MCOB 13. Firms should use a range of different short or long-term forbearance options as appropriate, including doing one or more of the following in relation to the mortgage contract:

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(a) extending its term;
(b) changing its type; or
(c) deferring payments due under it.
5.13 This list is not exhaustive and we expect firms to consider other options in appropriate
circumstances.
5.14 Firms need to ensure that they agree arrangements with their customers on sustainable
terms, taking account of their individual circumstances, except in as far as they act in accordance with paragraphs 3.5-3.8 above.
5.15 It is particularly important that firms are flexible and use a full range of forbearance options
at this time, as the pandemic and local or national responses to it evolve. Many customers may continue to face uncertainty about their short and medium-term employment and income, for example where they have been furloughed and don’t know if they will remain in employment. They may also have temporary interruptions in income, for example where they work in a sector affected by local or national restrictions to manage the spread of coronavirus.
5.16 Customers may also be expecting an imminent improvement to their financial situation, for
example, where they resume employment after restrictions are lifted.
5.17 This uncertainty may make it harder for a customer to commit to an arrangement to pay,
and may mean it is appropriate to delay using long-term solutions, such as changing the type of the loan, until a clearer picture emerges. Where this is the case, firms should offer short-term payment deferral arrangements where the firm permits the customer to make no or reduced payments for a specified period to give them more time to get back on track. Firms should not pressure a customer to commit to a longer-term arrangement if it is clear that the customer’s circumstances may materially change in the short-term. Second Charge Mortgages
5.18 Firms should be mindful that for some second charge mortgages there is a particular risk of
harm from the total debt escalating significantly when a customer defers payments or enters payment shortfall, particularly compared with what they would have otherwise have paid. Where normal payments are significantly disrupted for a material period of time this can mean customers struggle to repay the total amount owed. This is driven by the combination of relatively high interest rates adopted by some firms in this market, and that where interest is charged on sums in arrears, it is typically applied on a compound basis.

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5.19 In such cases, and in line with paragraph 5.12 above, it is particularly important that firms
consider using a range of forbearance options, including options beyond those listed in MCOB. These could include applying simple interest rather than compound to any payment shortfall, or reducing the interest rate charged on these sums (in some cases to 0%). This, when combined with sustainable arrangements to pay, may prevent the balance from escalating to a point where the customer is unlikely to be able to repay the total amount owed, and give borrowers more scope to effectively address any shortfall.
5.20 Customers who have benefitted from payment deferrals under the Payment Deferral
guidance will be at particular risk of this type of harm, as the deferrals will have disrupted payments under their mortgage. They may also have taken payment deferrals for their first charge mortgage which could have worsened their indebtedness. Reviewing arrangements
5.21 Firms should review any customer’s arrangements regularly, to ensure that their
circumstances have not changed and the support remains appropriate. This is particularly important in the current environment where a customer’s circumstances can change quickly, and in a way that might create or increase vulnerabilities.
5.22 Where arrangements are agreed for a limited time, firms may need to review them before
they come to an end, for example, if a customer suffers a further temporary loss of income. Where a customer’s circumstances have changed, firms should reconsider what support they need.
5.23 Firms should not repeatedly pursue one forbearance option without reconsidering whether it
remains appropriate. For example, where a customer repeatedly fails to meet an arrangement to pay, then firms should consider whether it is appropriate to the customer’s individual circumstances to enter into further such arrangements, or whether they should explore alternative options. Taking account of wider indebtedness
5.24 Firms should consider individual customer circumstances and any expected changes to them.
Where a customer indicates that they are having difficulties paying other priority debts, we expect firms to take those debts, and the consequences of falling behind on them, into account when considering or offering forbearance. This is particularly the case when agreeing a sustainable arrangement to pay. Section 8 below sets out our expectations for firms to signpost customers to debt advice and money guidance.

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Customer engagement
5.25 Engaging effectively with customers is particularly important where customers may be
experiencing significant uncertainty, stress and anxiety about their wellbeing and financial circumstances due to coronavirus. If customers have to repeatedly describe their circumstances this can lead to them becoming disengaged.
5.26 Giving customers a consistent point of contact is likely to improve interaction and deliver
better outcomes. However, we know it may be challenging to achieve this in the current environment where a large number of customers require support, particularly if firms have recruited new case handlers and are supporting them remotely.
5.27 So it is important that firms enable case handlers to keep, and subsequently refer to, clear
records of interactions with customers, including their individual circumstances and any judgements made, to give customers continuity and support.
5.28 Firms are responsible for putting in place sufficient resources to enable them to meet their
obligations to treat customers fairly and give them appropriate forbearance. We recognise that achieving this currently where many customers need support may be challenging. However, long or unpredictable call waiting times during busy periods can put customers off from engaging with firms and receiving timely and appropriate outcomes. Firms should consider what they can do to manage this. Approaches could include:

• being transparent about average waiting times, and times when customers are likely
  to experience longer or shorter waiting times;
• use of call-backs;
• offering pre-booked appointments;
• referring customers to online tools where these are available;
• clearly telling customers the information or documents they will need to have to hand.
  Customer communications
  5.29 Firms should ensure they give customers timely information to enable them to understand
  their financial position, their options and the implications of any arrangements.
  5.30 Under MCOB 13.3.4AR, a firm must give customers adequate information to understand the
  implications of any proposed arrangement. We expect firms to meet the same standards when acting under this guidance. Firms should be clear about the impact of any further

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5.31 Our Payment Deferral guidance sets out specific expectations for telling customers about the
options to repay any sums covered by a payment deferral. Paragraph 3.11 above sets out additional expectations for disclosures to customers who will be in payment shortfall at the end of a payment deferral agreed under the Payment Deferral Guidance.
5.32 MCOB 13 also sets out other disclosure requirements for customers in payment shortfall.
5.33 Some customers can become disengaged where they are required to complete detailed
forms with little help or may not have the capability and understanding to assess their needs without support. Some customers, including those with characteristics of vulnerability, may find it more difficult to interact offline and may prefer to complete as many steps as possible online. Others may not have access to online channels or find digital interactions difficult.
5.34 So firms should offer to engage with customers in different ways, including through a range
of channels and, where possible, give them the ability to switch between them.
5.35 Firms should be transparent about the range of options they can consider when a customer
is facing financial difficulties to enable customers and those advising them to understand and evaluate the options. Where possible firms should set these out on their websites. Supporting vulnerable customers
5.36 MCOB 13 requires that firms establish and implement clear, effective and appropriate
policies and procedures for the fair and appropriate treatment of customers whom the firm understands, or reasonably suspects, to be particularly vulnerable. Firms should understand, recognise and respond to vulnerable customers’ needs.
5.37 Many customers currently in financial difficulty, including those benefitting from, and exiting,
temporary payment deferrals, will display characteristics of vulnerability, particularly low financial resilience. Firms should take particular care to ensure they respond to the needs of customers with vulnerable characteristics at the greatest risk of harm.
5.38 Firms should use their communication channels, including digital channels, to proactively tell
customers about the support available. They should encourage customers to explain their needs, what support would help them, and take these into account. For example, taking into account the customer’s expressed communication preferences when contacting them at the end of a payment deferral and offering them a choice of channels when considering, or presenting, forbearance options.

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5.39 Firms should particularly consider the needs of customers with protected characteristics
under the Equality Act 2010, such as those with physical or mental health disabilities. End-to-end quality assurance
5.40 Firms should adopt a quality assurance approach that reviews the end-to-end process, rather
than focusing on individual interactions in isolation. This enables firms to evaluate better the fairness of customer outcomes overall, and helps with robust root cause analysis.
5.41 This will be particularly important now, when customer circumstances can change quickly
and firms may be using less experienced staff or cannot offer customers a consistent point of contact.
5.42 As firms may be dealing with large numbers of customers in a short space of time, there
may be limited time to refine and improve processes. Prompt action is particularly important to secure good outcomes for as many customers as possible. Firms should be using quality assurance methods and continuously improving their processes to ensure that they learn lessons, adapt and improve their approaches quickly where necessary. Training and competence and staff incentives
5.43 It is likely that higher numbers of customers will require help and support while the financial
impact of coronavirus continues. Firms may need to recruit extra and less experienced staff to meet the increased demands for forbearance. We know that many staff may continue to work remotely from home and that firms may need to adapt their processes to provide support and oversight.
5.44 Nevertheless, firms should ensure that staff are adequately trained for their roles and that
they have appropriate oversight arrangements in place. In this environment, this might mean using more experienced staff to deal with the most complex arrears and forbearance cases, including vulnerable customers at most risk of harm, and to support less experienced colleagues.
5.45 Firms should consider how best to ensure that their staff have the right skills, capabilities
and incentives to support customers. Incentives and staff objectives should be aligned with delivering forbearance that is appropriate in customers’ individual circumstances. For example, addressing operational challenges from coronavirus by incentivising staff to deal with calls too quickly may discourage them from taking appropriate escalation steps in complex cases, or mean they fail to adequately consider customers’ individual circumstances. It may therefore increase the risk of poor customer outcomes.

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Governance and oversight
5.46 The Senior Manager accountable for providing support to customers under this guidance
should critically review the firm’s policies, procedures and controls and ensure they are appropriate to meet the needs of customers seeking support. This includes ensuring incentives for staff are aligned with fair customer outcomes and taking responsibility for ensuring appropriate governance and oversight is in place to deliver these in practice.
5.47 Executive committees and the Board are responsible for ensuring the functions that provide
customer support in line with this guidance are appropriately resourced and demonstrate a supportive, customer-focused culture. Board management information should be sufficiently granular to enable the Board to satisfy itself that its customers are receiving consistently fair outcomes.
5.48 Firms must keep records of the support offered to customers. They should keep a record of
both generic information presented to all customers, and any personalised information presented to an individual customer. Our firm supervisors may request access to a firm’s records and the outcomes of a firm’s customer monitoring.

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6 Interaction with other MCOB provisions
6.1 We remind firms that where a firm varies the terms of a regulated mortgage contract or
home purchase plan solely for the purposes of forbearance or to avoid a payment shortfall, MCOB 4.8A.19R and MCOB 11.6.3R(3) continue to have effect. These dis-apply restrictions on execution-only and requirements to assess affordability.
6.2 The modified affordability assessment described in MCOB 11.9 is restricted to customers not
in payment shortfall. Customers who have taken a payment deferral under the Payment Deferral Guidance but repay the deferred amounts before their next payment is due (including by capitalising it) should not be considered to have been in payment shortfall and will meet the condition in MCOB 11.9.1R(2)(c). Lenders can therefore choose to adopt this approach for customers who resume payments at the end of a payment deferral period.
6.3 Where an existing regulated mortgage contract is being varied or other assistance is
provided in line with this guidance, MCOB 7.6.28R and MCOB 7.6.28AR set out the required disclosure about any change in the payments due.
6.4 Where a new regulated mortgage contract is entered into, the standard MCOB requirements
for new contracts apply. On disclosure, this means firms will need to issue an illustration.

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7 Repossessions
7.1 This section applies wherever a firm is considering or taking repossession action.
7.2 Before 1 April 2021, a firm should not absent exceptional circumstances (such as a customer
requesting that the proceedings continue) enforce repossession and should not seek, or enforce, a warrant for possession or a warrant of restitution. But firms may commence or re￾commence and continue repossession proceedings, up to and including obtaining a possession order, as long as they act in accordance with this guidance, MCOB 13, and applicable pre-action protocols.
7.3 From 1 April 2021, subject to any relevant government restrictions on repossessions, firms
may enforce repossession as long as they act in accordance with this guidance, MCOB 13 and relevant regulatory and legislative requirements. There is no ‘one-size-fits-all’ approach to how long firms should offer forbearance before starting a court process but action to seek possession should be a last resort and not be started unless all other reasonable attempts to resolve the position have failed.
7.4 Firms should be mindful of the need for fair and appropriate treatment of customers who
may be particularly vulnerable, including as a result of circumstances related to coronavirus. Firms should consider carefully the potential impacts on customers of possession proceedings and consider whether it is appropriate to commence or pursue repossession proceedings, including taking possession, in a particular case at this time. Firms should support and enable customers to disclose their circumstances and consider whether additional care may be required as a result. As set out in Section 5 of this guidance, firms should ensure that they have appropriate policies and procedures in place for the fair treatment of customers whom the firm understands, or reasonably suspects, to be particularly vulnerable and look closely at the needs of customers with protected characteristics under the Equality Act 2010.
7.5 When considering whether it is fair and reasonable to enforce repossession in a particular
case, a firm should consider, and take account of, whether there are any circumstances that may mean a customer, or a member of their household, is at greater risk of harm from coronavirus if they are required to vacate the property. Where the firm is aware of such risks, repossession should not be enforced until those risks have passed or can be appropriately managed. For example, firms should not require customers to vacate the property at a time when they, or a member of their household, are required to self-isolate.
7.6 Firms should also ensure that they keep their customers fully informed and discuss with
them the potential consequences of their suspending any steps to enforce repossession. For

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7.7 See our information for consumers regarding mortgages during the coronavirus situation.
7.8 We also remind firms of the guidance in paragraph 3.11 above regarding customers whose
payment deferrals have led to a shortfall.

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8 Debt help and money guidance
8.1 Customers who are coming to the end of a payment deferral or other temporary assistance
granted under the Payment Deferral guidance, as well as those experiencing payment difficulties after that guidance is no longer in force, might benefit from some help to manage their mortgage payments or their money more generally. Customers in different circumstances are likely to have different debt help or money guidance needs.
8.2 We expect firms to help customers understand what types of debt help or money guidance
are available. They can do this by signposting or referring them to appropriate sources of guidance. This could include providing a link to our information page ‘Dealing with financial difficulties during the coronavirus pandemic’ and to the MoneyHelper Money Navigator Tool.
8.3 When communicating with customers, firms should signpost or refer them to appropriate
money guidance, self-help tools or debt advice in a timely manner. For example, where a firm anticipates that a customer may need to wait before the firm can discuss or assess their situation and circumstances, they should consider how to avoid delaying the customer getting appropriate money guidance, self-help tools or referral to debt advice.
8.4 Where customers could benefit from debt advice we would expect firms to inform the
customer that free and impartial debt advice is available from not-for-profit debt advice bodies; and signpost or refer them to one or more sources of such free advice. Signposting can include providing a link to the MoneyHelper debt advice locator tool .
8.5 Firms should try to make any referrals as effective as possible, and should consider:

• encouraging customers to use digital tools, where appropriate;
• offering to transfer a customer’s call directly to a debt advice provider;
• whether the customer would benefit from a specialist source of debt advice, such as
  making a self-employed customer aware of business debt advice providers;
• the debt advice referral strategies in the Money Advice Service Strategic toolkit for
  creditors.
  8.6 Firms should tell customers that they can get guidance or not-for-profit debt advice through
  both digital and telephone services, and we would expect signposting and referral processes

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8.7 Where firms handle customers through a digital or scripted process, we expect this to
include appropriate signposting or referrals to debt advice or money guidance, as appropriate to the customer’s needs.
8.8 Where a customer indicates that they are experiencing payment difficulties with other debts,
the firm should, where possible within their existing systems capabilities, share a record of any income and expenditure assessment that they complete with customers or make these available to customers so that they are able to share them with other lenders and debt advice providers. Although firms are not required to rely on information collected by third parties, firms should support and encourage customers to re-use up-to-date income and expenditure information previously gathered where possible. For example, an income and expenditure assessment completed by another lender.
8.9 Customers who are considering whether an arrangement by which they agree to make no or
reduced payments for a specified period is right for them may benefit from firms referring them to the MoneyHelper Money Navigator Tool.
8.10 Some customers in short-term difficulty may feel they are able to deal with their own debts
without needing full debt advice. For these customers, the firm may also wish to:

• Suggest the customer works out a budget. Firms may find it helpful to refer customers to
  resources mentioned in our information page.
• Explain to the customer that, for most people, it makes sense to pay essential expenses
  and priority debts before any discretionary expenses or non-priority debts. To see if this is right for them customers can use online guides such as the MoneyHelper ‘How to prioritise your debts’ page.
• Recommend the customer contacts all their creditors to discuss their repayments.
  8.11 Firms should have regard to chapter 17 of PERG in our Handbook which provides guidance
  on the regulated activity of debt counselling.