Policy and Government

Fair treatment of mortgage customers in payment shortfall: impact of automatic capitalisation

18 January 2017

The Financial Conduct Authority (FCA) estimates that 750,000 mortgage customers have been impacted by automatic capitalisation - when arrears are included in contractual monthly installment (CMI) calculations but also pursued separately through a collections process. This results in customers effectively making overpayments and could have caused problems where this was unaffordable. The FCA have issued guidance which we welcome to address this issue and compensate those that have been affected. We have responded to stress the importance of communicating this complex issue well and suggested stronger guidance where possession orders (POs) have not been exercised. Read our full response below.

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