This chapter applies to a firm in a category listed in column (1) of the table in MCOB 13.1.2 R in accordance with column (2) of that table.

3To the extent that a rule in this chapter does not already apply to Gibraltar-based firms as a result of GEN 2.3.1R, it applies to them so far as the rule would have applied were it in effect before IP completion day.

This chapter applies with respect to administering a regulated mortgage contract, administering a home purchase plan1 and administering asale shortfall1.

The requirements in this chapter1will continue to apply to a firm after a regulated mortgage contract or home purchase plan1has come to an end following the sale of a repossessed property. References in this chapter to "customer" will include references to a former customer as appropriate.

1. (1)

   A firm must deal fairly with any customer who:

   1. (a)

      has or may have payment difficulties in respect of7 a regulated mortgage contract or home purchase plan;1

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   2. (b)

      has a sale shortfall; or1

      1
   3. (c)

      is otherwise in breach of a home purchase plan.

2. (1A)

   For the purposes of MCOB 13, a customer has or may have payment difficulties if:7

   1. (a)

      the customer has a payment shortfall;7

   2. (b)

      the customer indicates to the firm that they are at risk of falling into payment shortfall; or7

   3. (c)

      the firm otherwise becomes aware that the customer may be at risk of falling into payment shortfall.7

3. (2)

   A firm must put in place, and operate in accordance with, a written policy (agreed by its respective governing body) and procedures for complying with (1). Such policy and procedures must reflect the requirements of MCOB 13.3.2A R and MCOB 13.3.4A R.3

4. (3)

   A firm must ensure that the effectiveness of any policies and procedures put in place further to paragraph (2), and the firm’s compliance with them, is reviewed at appropriate intervals.7

1. (1)

   4Where a customer has a payment shortfall in relation to a regulated mortgage contract or home purchase plan, a firm must not attempt to process more than two direct debit requests in any one calendar month.

2. (2)

   Where a firm’s direct debit request, in respect of a customer who has a payment shortfall on a regulated mortgage contract or home purchase plan, has been refused, on at least one occasion in each of two consecutive months, due to insufficient funds, the firm must:

   1. (a)

      consider whether the method of payment remains suitable for the customer;

   2. (b)

      make reasonable efforts to contact the customer to discuss whether the method of payment remains suitable for the customer; and

   3. (c)

      not pass on any costs to the customer which were incurred as a consequence of presenting direct debit requests during this period of consideration.

5A firm must establish and implement clear, effective and appropriate policies and procedures for the fair and appropriate treatment of customers whom the firm understands, or reasonably suspects, to be 7vulnerable.

3A firm must, when dealing with any customer who has or may have7 payment difficulties:

1. (-1)

   where appropriate:7

   1. (a)

      inform a customer that free and impartial money guidance and debt advice is available, including from not-for-profit bodies;7

   2. (b)

      effectively communicate the potential benefits of accessing free and impartial money guidance and debt advice, and the range of channels through which it is available; and7

   3. (c)

      signpost or refer the customer to suitable sources of free and impartial money guidance or debt advice;7

2. (1)

   make reasonable efforts to reach an agreement with a customer over the method of repaying any payment shortfall4 or sale shortfall, in the case of the former having regard to the desirability of agreeing with the customer an alternative to taking possession of the property;

   4
3. (2)

   liaise, if the customer makes arrangements for this, with a third party source of advice regarding any7payment shortfall4 or sale shortfall;

   4
4. (3)

   allow a reasonable time over which any7payment shortfall4 or sale shortfall should be repaid, having particular regard to the need to establish, where feasible, a payment plan which is practical in terms of the circumstances of the customer;

   4
5. (4)

   grant, unless it has good reason not to do so, a customer's request for a change to:

   1. (a)

      the date on which the payment is due (providing it is within the same payment period); or

   2. (b)

      the method by which payment is made;

      and give the customer a written explanation of its reasons if it refuses the request;

6. (5)

   where no reasonable payment arrangement can be made, allow the customer to remain in possession for a reasonable period to effect a sale; and

7. (6)

   not repossess the property unless all other reasonable attempts to resolve the position have failed.

3In complying with MCOB 13.3.2A R, a firm must give a customer a reasonable period of time to consider any proposals for dealing with the payment difficulties.

3In complying with MCOB 13.3.1R(1) and MCOB 13.3.2AR(6) in respect of customers who have or may have payment difficulties:7

1. (1)

   a firm must consider whether, given the individual circumstances of the customer, it is appropriate to do one or more of the following in relation to the regulated mortgage contract or home purchase plan with the agreement of the customer:

   1. (a)

      extend its term; or

   2. (b)

      change its type; or

   3. (c)

      waive or7 defer payment of capital and/or7 interest due on the regulated mortgage contract or of sums due under the home purchase plan (including, in either case, on any sale shortfall); or

   4. (ca)

      reduce the interest rate being charged to the customer, or apply simple interest instead of compound interest; or7

   5. (d)

      treat a7payment shortfall4 as if it was part of the original amount provided (but a firm must not automatically capitalise a payment shortfall where the impact would be material4); or

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   6. (e)

      make use of any Government forbearance initiatives in which the firm chooses to participate;

2. (2)

   a firm must give customers adequate information to understand the implications of any proposed arrangement and of not agreeing an arrangement. This information must include the potential impact on the customer’s overall balance and how it will be reported to the customer’s credit file7.

3. (3)

   a firm must:7

   1. (a)

      take into account the effect of any potential arrangements on the customer’s overall balance; and7

   2. (b)

      take reasonable steps to ensure that any arrangements with customers in payment shortfall remain appropriate.7

4In MCOB 13.3.4A R, the impact of a capitalisation would be material if, either on its own or taken together with previous automatic capitalisations, it increased:

1. (1)

   the interest payable over the term of the regulated mortgage contract by £50 or more; or

2. (2)

   the contractual monthly repayment amount under the regulated mortgage contract by £1 or more.

3A firm must make customers aware of the existence of any applicable Government schemes to assist borrowers in payment difficulties in relation to regulated mortgage contracts.

1. (1)

   A mortgage lender or administrator1must make and retain an adequate record of its dealings with a customer who has or may have payment difficulties, or7 whose account has 7 a sale shortfall1, which will enable the firm to show its compliance with this chapter1. That record must include a recording of all telephone conversations (including video calls)7 between the firm and the customer which discuss any amount in arrears or any amount subject to payment shortfall charges4.3

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2. (2)

   A mortgage lender or administrator1must retain the record required by (1) for three years 3from the date of the dealing.31

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If a customer falls into arrears on a regulated mortgage contract, a firm must as soon as possible, and in any event within 15 business days of becoming aware of that fact, provide the customer with the following in a durable medium:

1. (1)

   the current MoneyHelper5 information sheet “Problems paying your mortgage”;3

   3
2. (2)

   a list of the due payments either missed or only paid in part;

3. (3)

   the total sum of the payment shortfall4;

   4
4. (4)

   the charges incurred as a result of the payment shortfall4;

   4
5. (5)

   the total outstanding debt, excluding charges that may be added on redemption; and

6. (6)

   an indication of the nature (and where possible the level) of charges the customer is likely to incur unless the payment shortfall4 is cleared.

   4

If a customer's account has previously fallen into arrears within the past 12 months (and at that time the customer received the disclosure required by MCOB 13.4.1 R), the arrears have been cleared and the customer's account falls into arrears on a subsequent occasion a firm must either:

1. (1)

   issue a further disclosure in compliance with MCOB 13.4.1 R; or

2. (2)

   provide, as soon as possible, and in any event within 15 business days of becoming aware of the further arrears,4 a statement, in a durable medium, of the payments due, the actual payment shortfall4, any charges incurred and the total outstanding debt excluding any charges that may be added on redemption, together with information as to the consequences, including repossession, if the payment shortfall4 is not cleared.

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Before commencing action for repossession, a firm must:

1. (1)

   provide a written update of the information required by MCOB 13.4.1 R(2), (3), (4), (5) and (6);

2. (2)

   ensure that the customer is informed of the need to contact the local authority to establish whether the customer is eligible for local authority housing after his property is repossessed; and

3. (3)

   clearly state the action that will be taken with regard to repossession.

1. (1)

   If a firm commences legal proceedings against a customer in respect of a regulated mortgage contract or a home purchase plan, it must give notice of the commencement of the legal proceedings to all persons specified in MCOB 13.4A.2 R at the time of their commencement, or as soon as reasonably practicable afterwards.

2. (2)

   If a customer voluntarily surrenders possession of their property to a firm, the firm must give all persons specified in MCOB 13.4A.2 R notice of the surrender at the time it happens, or as soon as reasonably practicable afterwards.

3. (3)

   If a customer is placed in an assisted voluntary sale process, a firm must give all persons specified in MCOB 13.4A.2 R:

   1. (a)

      notice that the customer has entered an assisted voluntary sale process within ten working days from the date the customer entered the assisted voluntary sale process;

   2. (b)

      notice of the proposed sale and details of the proposed sale price and method of sale at least ten working days before the date when the property is proposed to be offered for sale; and

   3. (c)

      details of the sale price within no more than ten working days from the acceptance of an offer to purchase the property.

Notices and other details under MCOB 13.4A.1 R are to be given to each person having a legal or equitable mortgage in the relevant property over which the firm has security under a regulated mortgage contract or a home purchase plan.

Where an account is in arrears (whether or not the shortfall is attracting charges)4, a firm must provide the customer with a regular written statement (at least once a quarter) of the payments due, the actual payment shortfall, the debt and, where relevant, the charges incurred4.

A firm must not put pressure on a customer through excessive telephone calls or correspondence, or by contact at an unreasonable hour.

A firm must ensure that, whenever a property is repossessed (whether voluntarily or through legal action) and it administers the regulated mortgage contract or home purchase plan1in respect of that property, steps are taken to:

1. (1)

   market the property for sale as soon as possible; and

2. (2)

   obtain the best price that might reasonably be paid, taking account of factors such as market conditions as well as the continuing increase in the amount owed by the customer.

   1

A firm must ensure that, as soon as possible after the sale of a repossessed property, if the proceeds of sale are less than the amount due under the regulated mortgage contract or home purchase plan1, the customer is informed in a durable medium of:

1. (1)

   the sale shortfall; and

2. (2)

   where relevant, the fact that the sale shortfall1may be pursued by another company (for example, a mortgage indemnity insurer).

   1

1. (1)

   If the decision is made to recover the sale shortfall,1 the firm must ensure that the customer is notified of this intention.

   1
2. (2)

   The notification referred to in (1) must take place within five years of the date of the sale (if the regulated mortgage contract or home purchase plan1is subject to Scottish law) or within six years (in all other cases).

A firm must ensure that, on the sale of a repossessed property, if the proceeds of sale are more than the amount due under the regulated mortgage contract or home purchase plan1, reasonable steps are taken, as soon as possible after the sale, to inform the customer in a durable medium of the surplus and, subject to the rights of any subsequent mortgage or charge holders, to pay it to him.

Where the regulated mortgage contract is for a business purpose or is with a high net worth mortgage customer4, a firm may as an alternative to MCOB 13.4.1 R(1) provide the following information in a durable medium instead of the MoneyHelper5 information sheet “Problems3 paying your mortgage”:2

1. (1)

   details of the consequences if the payment shortfall4 is not cleared;

   4
2. (2)

   a description of the options available to the customer for clearing the payment shortfall4; and

   4
3. (3)

   (in the case only of loans for a business purpose) 4details of sources of fee-free advice for business customers.

If a customer falls into arrears, a firm must provide the customer with adequate information about the arrears in a durable medium:

1. (1)

   as soon as practicable after becoming aware of that fact;

2. (2)

   at quarterly intervals; and

3. (3)

   before commencing action for repossession.