Mortgages and coronavirus - enabling positive consumer outcomes

Speaker: Jonathan Davidson[1], Executive Director of Supervision – Retail and Authorisations
Event: Delivered online as introduction to Mortgage Forbearance Webinars
Delivered: 30 September 2020
Note: this is the speech as drafted and may differ from the delivered version

Highlights

• Many borrowers will be facing a loss of income, over differing durations - and solutions may need to reviewed regularly as their circumstances change.
• We recognise the need to prioritise support for borrowers that are most at risk of harm, or who face the greatest financial difficulties.
• We want to see automated approaches delivering appropriate outcomes, in a way that supports customer understanding and firms to  ensure that more hands-on support is available for those that need it.

Introduction

Thank you for joining us for these webinars. We are hosting these to help firms in their preparations for the next phase of supporting mortgage customers through payment difficulties they are facing as a result of coronavirus (Covid-19). [We’re also holding separate sessions to consider these issues from a consumer credit angle.] 

We have a packed agenda for you. This morning we’ve got FCA experts from our Chief Economist’s Department to talk to you about customer engagement, and then we’ll be hearing from our Consumer Insight Team about how coronavirus is changing customer vulnerability. Tomorrow morning, we have a panel session with some of our FCA subject matter experts, from Supervision, Policy, our Chief Economist’s Department, and our Consumer Insight team, to talk through some case studies that we hope will illuminate some of the situations you are facing.

I hope the sessions will prompt valuable discussions between us all about the real-life issues you face when supporting customers who are in, or have been in, difficulty.

We will be focusing on some of the key areas that underpin how you support your customers, whether they are coming to the end of a payment deferral, or experiencing covid-related financial difficulty for the first time – and how you continue to deliver further support to those customers that need it. Of course, you are the experts here, this is what you do every day. So, we are very interested to listen to your views on the issues discussed, and consider how we can all learn from, and build on, good practice. 

What we expect from firms as we move away from the ‘crisis’ approach, towards tailored support

We are hearing from some firms a desire to move from the ‘crisis’ approach taken so far during coronavirus back to ‘business as usual’. This is understandable, but perhaps it is still rather unclear what the ‘new’ business as usual looks like. We are hearing from some firms a desire to move from the ‘crisis’ approach.

Coronavirus is affecting many aspects of customers’ lives - their health, their employment and their finances - in different ways and at different times. Many borrowers will be facing a loss of income, over differing durations - and solutions may need to reviewed regularly as their circumstances change.

So, we are all moving into new territory, and may need to continue to live in a world of shifting sands where new circumstances and new challenges arise on a regular basis. But it is so important for us all to do our best to get this right.

The industry has done an amazing job delivering a huge number of mortgage payment deferrals. These have supported your customers through a very difficult time. We can see from data reported by firms that most mortgage deferrals have now expired, or soon will do, and most mortgage borrowers are resuming payments.

But there will be a significant minority of customers who will face ongoing difficulties through this unprecedented period. And we all need to work together so they get the best possible outcomes. We know you have been working hard to develop your plans to support these customers. 

Responding to operational challenges to support consumer outcomes

We understand that you are facing operational challenges. Whether due to remote working of your staff, and other covid-related restrictions that affect them, such as the need to socially distance and to self-isolate. The need to move staff into different areas, perhaps away from new business to areas that support your existing customers, and the additional training and oversight this involves. And the need to change your processes and systems to support this. 

I’m sure you will have been actively planning how you will resource these customer-supporting functions. And how you will ensure that your training and competence frameworks are effective, and how your staff are monitored, and mentored. It is a demanding job at any time to be on the frontline, supporting customers in financial distress. It must be so much harder for staff when they are working from home, particularly if they don’t feel adequately supported. So, they need to be supported, so that in turn customers are treated well.

And don’t forget those third-party firms that you are outsourcing to – you will need to continue to monitor them to check that they are delivering the good customer outcomes that you expect. 

Appropriate support for borrowers who face ongoing payment difficulty 

You will have no doubt seen our most recent mortgage guidance[2], which confirms the next stage of support for mortgage borrowers. In this we recognise the need to prioritise support for borrowers that are most at risk of harm, or who face the greatest financial difficulties. And it should go without saying that it remains as important as ever to deliver outcomes that are right for the individual borrowers - rather than adopting ‘one size fits all’ solutions. This has been our mantra for many years – and continues to be so.

But the sheer number of borrowers that might need help in a short period of time will be a significant challenge. Some firms are proposing to deal with this through approaches which are more automated than we would usually see for mortgage borrowers in payment difficulties, and I hope the guidance has clarified our view on digital solutions.

We’ll be talking about this more in later sessions. But it will be no surprise to hear that we want to see these automated approaches delivering appropriate outcomes, in a way that supports customer understanding. And that more hands-on support is available for those that need it.

Clear communications will be vital here – so  the journey is easy to follow for all –  customers are signposted to additional appropriate support where relevant. And that you can identify and act on customer vulnerability. 

Where customers do follow a more automated journey we will want them to understand  the implications of the option they agree to. You will of course need to monitor the outcomes they receive  – so that you can act quickly to fix any issues and put them back in the right position.   

In summary

Over the coming months, we will be looking at how your firms have adapted to the challenges, and the outcomes received by consumers through supervisory ‘multi-firm’ work.

If we see significant issues, we will intervene. But we understand that this is a difficult environment, so where it is evident that firms are trying to do the right thing we want to be able to work with you to ensure that issues are resolved.

Once again thank you for taking the time to join us, and I hope you enjoy the event and find it useful.