FCA opens CP23/13 consultation on Tailored Support Guidance

The Financial Conduct Authority published CP23/13, Strengthening protections for borrowers in financial difficulty: consumer credit and mortgages, on 25 May 2023¹. The consultation proposes changes to two FCA sourcebooks, CONC and MCOB, setting out how the regulator intends to incorporate aspects of the Tailored Support Guidance for consumer credit and mortgages¹. Responses close on 13 July 2023¹.

Current rules in CONC 7 and MCOB 13 primarily apply to customers who have already missed a payment¹. In line with the Tailored Support Guidance, the FCA proposes to broaden the scope of both sections to clarify to firms that appropriate support should be provided to customers in or at risk of payment difficulty, which is designed to ensure customers are provided with appropriate support at an earlier stage¹. The FCA also proposes to replace the existing expectations on vulnerability in CONC 7 and MCOB 13 with guidance reminding firms that they should have regard to the expectations set out in FG21/12, including when developing policies and procedures for customers who have, or may have, payment difficulties, and that firms will need to use their judgement to consider what each section of FG21/12 means for them and what they should do to treat customers fairly¹. The proposals also carry significant detail on transparency and accessibility of forbearance options, money guidance and debt advice, and providing information to customers¹.

The consultation sits alongside other published material on borrowers' circumstances. On 17 May 2023 the FCA published research from the 2022 Financial Lives survey on the consumer experience of the rising cost of living, which found that the number of people struggling to meet bills and credit repayments had risen by 3.1m since May 2022, to 10.9m from 7.8m¹. The same research imputes that around half of UK adults, 28.4 million people, felt more anxious or stressed due to the rising cost of living at January 2023 than six months earlier¹. A total of 19,145 respondents completed the 2022 survey, which closed in May 2022, and the full survey is to be published later in 2023¹.

Separately, the Vulnerability Registration Service, with Healthy Homes Solutions, published a study suggesting that 14.6m people in the UK, 27% of the population, consider themselves vulnerable, with 24.5m adults, 45% of the population, affected by circumstances the FCA defines as key drivers for vulnerability¹. The Centre for Social Justice published a report on illegal money lending on 19 April 2023, and Christians Against Poverty released its client report Taking on UK Poverty on 24 May 2023¹.

Why it matters for households

The rules in question cover consumer credit and mortgages, so the people affected are borrowers who fall behind on repayments or who are at risk of doing so. Under the current text, CONC 7 and MCOB 13 primarily bite once a payment has already been missed; the proposal would extend the point at which firms are expected to provide support to customers in or at risk of payment difficulty¹. If the rules come into force as proposed, the Tailored Support Guidance would be withdrawn at the same time, meaning the expectations would sit in the sourcebooks rather than in separate guidance¹. The FCA's own research puts the number of people struggling to meet bills and credit repayments at 10.9m, up 3.1m since May 2022¹. Nothing in the consultation changes what borrowers owe, and no change takes effect before the rules are made.

What happens next

The consultation closes on 13 July 2023, with responses requested via the FCA's response form or by email¹. The FCA intends to publish a final Policy Statement, including its response to feedback, in H2 2023, and expects the rules to come into force in H1 2024, with the Tailored Support Guidance withdrawn at the same time¹. The Finance & Leasing Association said it will develop its response to the consultation in collaboration with members¹.