Finalised Guidance for Repossessions

News just released by the Financial Conduct Authority effecting repossessions.

7.1 This section applies wherever a firm is considering repossession action, including where a customer is currently receiving a payment deferral under the Payment Deferral Guidance.

7.2 A firm should not absent exceptional circumstances (such as a customer requesting that the proceedings continue) enforce repossession and should not seek, or enforce, a warrant for possession or a warrant of restitution before 1 April 2021.

7.3 But firms may commence or re-commence and continue repossession proceedings, up to and including obtaining a possession order, as long as they act in accordance with this guidance, MCOB 13, and applicable pre-action protocols.

7.4 There is no ‘one-size-fits-all’ approach to how long firms should offer forbearance before starting a court process but action to seek possession should be a last resort and not be started unless all other reasonable attempts to resolve the position have failed.

7.5 Firms should be mindful of the need for fair and appropriate treatment of customers who may be particularly vulnerable, including as a result of circumstances related to coronavirus. Firms should consider carefully the potential impacts on customers of ongoing possession proceedings when considering whether it is appropriate to commence or pursue repossession proceedings in a particular case at a time when a warrant for possession will not be sought.

7.6 Firms should ensure that they keep their customers fully informed, and discuss with them the potential consequences of their suspending any steps to enforce repossession. For example:

  •  they should explain the effect of remaining in the property on the customer’s remaining equity if the amount owed is increasing or the value of the property subsequently falls;
  • firms should be mindful of the effect of MCOB 3A.2.1R(1) (which amplifies Principle 7) when applying for and obtaining a possession order, and should tell customers that although the court may rule, or has ruled, that the lender is entitled to possession of the property the lender will not take further steps to seek a warrant for possession before 1 April 2021.

7.7 See our information for consumers regarding mortgages during the coronavirus situation.

7.8 We also remind firms of the guidance in paragraph 3.11 above regarding customers whose payment deferrals have led to a shortfall.