INSIGHTS+ ¦ PS24/2 Strengthening protections for borrowers in financial difficulty

Recent updates to the FCA’s CONC 7 rules (PS24/2) represent a significant advancement in protecting consumers facing financial difficulties, particularly those using mortgage and consumer credit products.

These changes, set to take effect in November 2024, are crucial as they provide stronger, more comprehensive support mechanisms for individuals at risk of or already experiencing financial hardship. By integrating key aspects of the coronavirus Tailored Support Guidance (TSG) into formal regulations, the new rules extend beyond temporary pandemic-related relief, making consumer protection a permanent fixture in the regulatory landscape.

Key Highlights of the Updates:

  1. Strengthened Protections:
    The incorporation of TSG elements into the FCA Handbook provides permanent support for customers facing financial difficulties, particularly in the mortgage, consumer credit, and overdraft sectors.
  2. Broader Scope of Support:
    The new rules apply not only to customers in arrears but also to those at risk of financial hardship, ensuring early intervention before missed payments.
  3. Expanded Forbearance Options:
    Firms now have access to a wider range of support measures, including debt write-offs and customised repayment plans, allowing for tailored assistance based on individual circumstances.
  4. Clear and Improved Communication:
    Firms must provide clear and accessible information about forbearance options, including how changes will impact customers’ credit files. Additionally, firms are required to publicise these options on their websites to improve transparency.
  5. Focus on Vulnerable Customers:
    Emphasising the fair treatment of vulnerable individuals, the updated rules ensure that firms consider the needs of customers at risk of financial harm, in alignment with the FCA’s broader guidance on supporting vulnerable customers.
  6. Regular Reviews of Policies:
    Firms are now required to regularly review the effectiveness of their policies and procedures to ensure that customer outcomes align with regulatory expectations.
See also  Financial Crime: Update Training

These updates provide a fairer and more transparent system, designed to help both consumers and firms navigate financial challenges more effectively, with a strong emphasis on long-term support and early intervention.

Effective Date:
The new rules will come into effect on 4 November 2024.

Download : Change Briefing



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