Whilst these forbearance requests pro- videdmuch needed reassurance for the many people struggling due to redun- dancies and failing industries, lenders expressed concern that the mortgage payment holidays would only delay the inevitable for too many customers. Although the majority of customers would most likely resume repayment as normal, many could remain in finan - cial difficulty, with the potential for a swathe of mortgage defaults hitting later in the year. This could potentially delay a recovery in the finance indus - try as cash flow is dented, prevent - ing new loans from being granted. The question arose: “What does the future hold for the mortgage indus- try?”. Recently, the Financial Conduct Authority (FCA) has made a step towards answering this question, by announcing proposals to ensure that firms provide tailored support to mort - gage borrowers who continue to face difficulties with their repayments as a result of the pandemic. The guidance aims to ensure cus- tomers receive the support they need, whether they requested payment deferrals at the start of the pandemic and continue to face financial difficul -
ties or their financial situation is newly affected after the current guidance ends, which will be on 31 October. The new, draft guidance proposes that firms consider the appropriateness of a range of short and long-term support options, directly related to the specific circumstances of the customer. This, however, would require many lenders to find better processes that allow them to assess actual affordability, based on up-to-date details. Lending - Metrics’ OpenBankVision (OBV) does exactly this, providing fully verified, cat - egorised and machine-readable Open Banking data, instantly. Many lenders already adopted OBV when the flurry of mortgage holiday requests started pouring in, so as to avoidmanual forbearance processes or a “yes to all” scenario. Others embraced OBV after the 3 month payment holiday extension was announced, in order to utilise its simple ‘Refresh’ option to repeatedly retrieve the latest real-time data and enable regular reassessment of income and affordability as borrow- ers’ circumstances changed. Now, with the FCA urging firms to prioritise giving tailored support to borrowers who face the greatest financial difficulties, being
able to make better and more informed decisions by seeing a customer’s indi- vidual circumstances first-hand is more important than ever. FCA Interim Chief Executive Christo - pher Woolard notes that borrowers facing financial difficulties due to the pandemic will continue to face uncer- tainty or may experience temporary interruptions to their income, so a firm’s ability to view categorised bank state - ment data instantly with OBV would allow them to best assess borrowers affordability on a case-by-case basis. Woolard states that this is the core message of their guidance: “We are proposing that firms contact their bor - rowers in good time before the end of a payment holiday, and work with them to come up with a tailored plan to help get them back on track. Firms should not take a ‘one size fits all’ approach.” By adopting OBV, lenders can conduct this tailored approach easily and in real- time. To find out how OBV can benefit you or your business, contact us today on +44 (0) 2394 211010. The full FCA guidance can be read here.
+44 (0) 2394 211010 | www.lendingmetrics.com
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