ABOUT: The FCA’s BiFD project aims to support borrowers in financial difficulty, especially due to the pandemic, by ensuring firms provide appropriate assistance and adhere to set guidelines.
LINK: Borrowers in Financial Difficulty Project – FCA
Summary
The Financial Conduct Authority (FCA) in the UK launched the Borrowers in Financial Difficulty (BiFD) project in March 2021 to assist borrowers facing financial challenges, particularly due to the COVID-19 pandemic. This initiative focuses on monitoring and guiding firms to ensure they offer adequate support to customers in need. The project encompasses a range of retail lending products and involves regular surveys, in-depth firm analysis, and consumer research. The FCA emphasizes the importance of firms providing tailored support, recognizing vulnerable customers, and maintaining effective training and quality assurance practices. The article details the interim findings of the project, highlighting both the progress and areas needing improvement in the financial industry’s response to borrowers in difficulty.
Key Points and Ideas
- The BiFD project was initiated to support borrowers impacted by the pandemic.
- It covers a variety of retail lending products, including mortgages and consumer credit.
- The FCA has conducted surveys and deep dives into firm practices and consumer experiences.
- Guidance for payment deferrals was implemented, benefiting millions of borrowers.
- The Tailored Support Guidance (TSG) was established for ongoing pandemic-related difficulties.
- Firms are expected to offer forbearance and consider customers’ individual circumstances.
- Training and quality assurance in dealing with financial difficulties are crucial.
- The FCA found a need for better training and oversight of staff in financial firms.
- Some firms have adopted innovative training and quality assurance practices.
- The FCA plans to continue engaging with firms to improve borrower outcomes.
- There is an ongoing review of the TSG and potential changes to the FCA Handbook.
- The FCA may use supervisory and enforcement powers to protect customers from poor firm performance.
Key Statistics
- Over 1.8 million mortgages and 3.4-4 million consumer credit agreements had payments deferred.
- In July 2021, over 78% of firms offered support and forbearance to customers anticipating payment difficulties.
- In November 2021, 72% of firms assessed the effectiveness of their forbearance options.
- Over 70% of mortgage and credit card firms identify customers in vulnerable circumstances.
- 85% of firms attempted to contact almost all their customers in arrears at least once.
Key Take Aways
- Effective support for borrowers in financial difficulty is vital, especially during a pandemic.
- Tailored forbearance and understanding individual customer needs are key to effective financial support.
- Training and quality assurance are critical for firms to handle financial difficulties appropriately.
- The FCA is actively monitoring and guiding firms to ensure the best outcomes for customers.
- Continuous improvement and adaptation of strategies are necessary in response to evolving financial challenges.
- The FCA’s role in protecting consumers and enforcing guidelines is crucial for maintaining fair financial practices.
- The financial industry must remain vigilant and responsive to the needs of vulnerable customers.
- Collaboration between regulatory bodies and financial firms is essential for effective consumer protection.
- The pandemic has highlighted the need for flexible and empathetic approaches to financial difficulties.
- Regular assessment and adaptation of guidelines and practices are necessary to address ongoing financial challenges.
- The FCA’s ongoing review and potential updates to the TSG and Handbook reflect a commitment to evolving consumer needs.
- Ensuring fair treatment and protection of consumers in financial difficulty remains a priority for the FCA.
RO-AR insider newsletter
Receive notifications of new RO-AR content notifications: Also subscribe here - unsubscribe anytime
