Consumer finance regulatory news, October 2020 # 3

Hogan Lovells

Hogan Lovells

Recent regulatory developments of interest to financial institutions with focus on consumer finance. Reports on FCA consultation on Debt Breathing Space Regulations and an extension of the deadline for contacting mortgage prisoners. See also our General regulatory news linked in the Related Materials links.


  • Debt Breathing Space Regulations: FCA CP20/21
  • COVID-19: FCA extends deadline for contacting mortgage prisoners

Debt Breathing Space Regulations: FCA CP20/21

The UK Financial Conduct Authority (FCA) has published a consultation paper, CP20/21, on changes to its Handbook resulting from the Debt Respite Scheme (Breathing Space Moratorium and Mental Health Crisis Moratorium) (England and Wales) Regulations 2020 (the Regulations) which are expected to come into force in England and Wales on 4 May 2021. The aim is to clarify how the FCA's rules interact with the Regulations.

Firms should take note that, while the FCA does not have powers under the Regulations to supervise compliance or enforce against them, it points out that "systematic non-compliance" is likely to be of interest to it as this may place a question mark over whether a firm is meeting its requirements in the Consumer Credit sourcebook (CONC) rules, the suitability requirements in the FCA's Threshold Conditions, or breaching one of the FCA's Principles for Business (for example, Principle 6 – treating customers fairly).

CP20/21 closes to responses on 6 January 2021.

Read more in our separate briefing: Debt Breathing Space Regulations: FCA consults on Handbook changes.

COVID-19: FCA extends deadline for contacting mortgage prisoners

The FCA has updated its webpage on lenders delivering switching options for mortgage prisoners. The FCA is aware that COVID-19 has meant that lenders have not been able to offer switching options for mortgage prisoners as quickly as originally anticipated.

The FCA rules require administrators and inactive lenders to write to customers who may be eligible to make use of these switching options, letting them know that they may be able to switch their mortgage. The FCA knows that some firms have started to send out these communications. However, it recognises that the delay in availability of switching options has caused the time available for sending out these communications to become compressed.

To help firms manage the operational challenge this presents, the FCA has extended the window during which firms are expected to contact eligible customers about switching options to 15 January 2021. The FCA had previously extended the notification window to 1 December 2020 due to COVID-19.

By reducing operational pressures on firms, the FCA believes that this short, six-week extension, will ensure better outcomes for mortgage prisoners.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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