Too many borrowers weren’t helped during the pandemic and were left with unaffordable repayments or charged high fees for falling behind with their payments. While the pandemic was often described as ‘unprecedented’ we’ve now immediately rolled into another crisis, with even more people expected to struggle with their bills than during the peak of the pandemic.
Lenders and mortgage companies are being warned to offer more help to customers who are struggling to pay, with just 30% offering sufficient help during the pandemic. Half of the lenders reviewed by the regulator have been asked to make material changes to their processes, and seven firms will pay £12.4m in compensation to almost 60,000 customers.
Laura Suter, head of personal finance at AJ Bell, comments on the FCA’s findings on mortgage and credit lenders in the pandemic: “The failings by lenders meant people with debt were left with ‘unaffordable and unsustainable’ repayments, which will no doubt have had a big impact on their lives. The regulator has said more customers should be offered things like a reduction in interest rates or extending the term of the mortgage, rather than just reducing monthly payments. Lenders should also consider waiving fees and make it easier for customers to access the right support and signpost them to debt charities or money guidance, where needed.
“We’re already seeing more people turn to debt to afford rising bills and it’s imperative that those who are struggling to make repayments are offered support and solutions, rather than being left to struggle to pay and ending up in a debt spiral.
“The regulator also found that lots of people don’t want to contact their lender when they miss a payment, thinking that they either won’t be helpful or won’t be able to help. If someone is struggling to pay their mortgage or debt repayments it’s best to contact your lender as soon as possible to flag the difficulties and find a solution. While it’s often a scary prospect to admit that you’re having difficulties, it’s far better to address it head-on than bury your head in the sand.”