FCA rules for borrowers in financial difficulty come into force and TSG withdrawn

The Financial Conduct Authority's rules strengthening protections for borrowers in financial difficulty came into force on 4 November 2024, the date the regulator had set when it published its final policy statement on 10 April 2024¹. The same date marks the withdrawal of the Tailored Support Guidance (TSG) for consumer credit, mortgages and overdrafts, which the FCA introduced during the coronavirus pandemic to set out how firms could support customers in financial difficulty¹.

The rules incorporate relevant aspects of the TSG into the FCA Handbook, alongside further targeted changes¹. The FCA said the changes aim to "build on our Tailored Support Guidance (TSG) and provide a stronger framework for firms to protect customers facing payment difficulties"¹. The regulator consulted on the proposals in CP23/13, which opened on 25/05/2023 and closed on 13/07/2023, and received 39 responses from firms, trade bodies and consumer groups¹.

The FCA also updated its non-Handbook guidance for mortgage lenders supporting existing borrowers affected by the rising cost of living. The updated FG24/2 replaced FG23/2 with effect from 4 November 2024¹.

The rules primarily affect consumer credit lenders, including MCD article 3(1)(b) lenders, premium finance firms, mortgage lenders and administrators, home purchase providers and administrators, firms carrying out consumer hiring, operating an electronic system in relation to lending for a borrower under a P2P agreement, or debt collecting, consumer credit and mortgage lenders in supervised run-off under the financial services contracts regime, and Gibraltar-based consumer credit and mortgage lenders passporting into the UK¹.

Among the finalised changes, the FCA said firms will be required to send regular statements to all mortgage customers in arrears, regardless of whether the payment shortfall is attracting charges². Information given to customers about a proposed arrangement must include how it will be reported to their credit file in factual terms². For credit including overdrafts, guidance on priority debts and essential living expenses was changed to include, but not be limited to, payments for mortgages, rent, council tax, food and utility bills². For mortgages, guidance was changed so firms should be transparent about the range of forbearance options they may consider, rather than will consider².

The FCA said it was not introducing proposed guidance under CONC 7.7.6G(2) and (3) on charges, and was not progressing proposed guidance at CONC 5D.3.3G(7) on publishing eligibility criteria and interest rates for refinance loans on firms' websites². It also said the rules do not introduce new requirements on firms to take additional steps, or create new processes and systems, to identify customers who may be in financial difficulty².

On timing, the FCA said some industry respondents had asked for a 12-month implementation period, and that it was giving firms just over six months to implement the changes².

Why it matters for households

The rules apply to people in or at risk of payment difficulty with consumer credit, overdrafts and mortgages from 4 November 2024, the date the TSG was withdrawn¹. The FCA said the changes bring a new cohort of customers into scope of MCOB 13, in addition to those in payment shortfall². It also said the rules and guidance do not require firms to proactively identify whether customers are at risk of falling into a payment shortfall².

The FCA's own monitoring plans include tracking market and regulatory data on customers in financial difficulty, identifying outlier firms and products, and monitoring complaints and information from the Financial Ombudsman Service about the treatment of customers in financial difficulty². It said that if problems originally identified in a market are still occurring and its remedies have not had the intended effect, or had an unintended effect, it will consider whether to take further action².

What happens next

The rules took effect on 4 November 2024 and the TSG was withdrawn on the same date¹. The FCA said it will engage with stakeholders about the impact of its intervention and continue to monitor data as part of its ongoing supervision of firms². No further implementation dates have been reported.