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New rules for dealing with interest-only
The Financial Conduct Authority (FCA) have released guidance on dealing fairly with interest-only mortgage customers who risk being unable to repay their loans.
In a review, the regulator clarified the need for early and frequent communication with the customer according to the potential risk of non-repayment, making sure that enough time was given to consider maturity options.
The report emphasises that, while customers are ultimately responsible for their mortgages, and mortgage lenders are not obliged to offer options at maturity, firms should be able to consider what options they are willing to offer those who are unable to pay.
Examples of these options include switching the mortgage to a capital-repayment basis, extending the mortgage term, or accepting overpayments.
The review also specified that there should be documented guidance for front-line staff to ensure they have enough knowledge and training to deal with customers who have interest-only mortgages.
The new guidance on treating interest-only customers fairly will come into effect with the Mortgage Market Review, on 26th April 2014.
Post courtesy of Financial Reporter.