Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what steps he is taking to ensure that the credit ratings of homeowners who have taken mortgage holidays during the covid-19 outbreak are not negatively affected.
On 20 March, the Financial Conduct Authority (FCA) published guidance on what it expects mortgage lenders to do for consumers facing financial difficulties as a result of COVID-19.
As part of this guidance, the FCA requires that the arrears status on credit files should be masked to minimise the negative impacts that consumers might otherwise experience from taking a payment holiday. This was reconfirmed in the FCA’s updated guidance published on 2 June and continues to be the case for any borrower taking a payment holiday until 31 October 2020.
When considering new loan or credit applications, lenders will look at a range of factors, not just a borrower’s credit file. This could include a customer’s income and future ability to make repayments, which may have been affected by COVID-19.
Officials continue to have discussions with the FCA and credit reference agencies on these matters.