Currently the general stay on most possession proceedings (and appeals in such proceedings) is due to run out at the end of this month.

That general stay may well be extended although county courts have been taking steps to prepare for hearings to re-commence soon.

The Financial Conduct Authority (FCA) has published updated guidance, the key points of which are below for mortgage lenders, mortgage administrators, home purchase providers and home purchase administrators,

  1. Customers that have not yet had a payment holiday and who experience financial difficulty have until 31 October 2020 to request one.
  2. The current ban on lender repossessions of homes will be continued to 31 October 2020. This will ensure people are able to comply with the government’s policy to self-isolate if they need to.
  3. Firms will communicate with customers regarding what happens when their payment holiday ends. They should offer a range of options for how the missed payments will be repaid, if they are able to resume payments.
  4. Lenders will continue to support customers who have already had a payment holiday where they need further help. Firms should contact their customers to find out what they can re-pay and, for those who remain in temporary financial difficulty, offer further support, which will include the option of a further three-month full or part payment holiday.
  5. Payment holidays offered under this guidance will not have a negative impact on credit files. However, consumers should remember that lenders may use information obtained from other sources, such as bank account information, in their lending decisions.

In terms of repossessions, the guidance says:

  1. Firms should not commence or continue repossession proceedings against customers before 31 October 2020, given the unprecedented uncertainty and upheaval they face, and Government advice on social distancing and self-isolation. This applies irrespective of the stage that repossession proceedings have reached and to any step taken in pursuit of repossession. Where a possession order has already been obtained, firms should refrain from enforcing it.
  2. We consider that commencing or continuing repossession proceedings at this time is very likely to contravene Principle 6 and MCOB 2.5A.1R – absent exceptional circumstances (such as a customer requesting that proceedings continue). We will not hesitate to take appropriate action where necessary.

Breach of the Mortgage Conduct of Business Rules does not, without more, create a defence to a claim for possession however a Defendant may have a claim for damages which can be relied upon by way of a set off to argue that execution of a possession order should be suspended. As Simler J said in Thakker v Northern Rock plc [2014] EWHC 2107 (QB).

The FCA has also suggested that even where lenders are not regulated under the Financial Services and Markets Act 2000, such lenders may still be in breach of general consumer protection law if they do not follow the FCA’s guidance which states:

“Where there has been an assignment of the rights under the mortgage contract to a non-authorised person, the person must still comply with general consumer protection law including the Consumer Protection from Unfair Trading Regulations 2008. A commercial practice may be unfair under those Regulations if (among other things) it contravenes the requirements of professional diligence. Professional diligence means the standard of special skill and care which a trader may reasonably be expected to exercise towards consumers. The guidance below is intended to describe the standards of skill and care we consider may reasonably be expected of lenders in the mortgages market in the current exceptional circumstances of coronavirus. If, therefore, a lender does not follow this guidance, that could call into question whether it is meeting the requirements of the 2008 Regulations, even if the lender is not regulated under FSMA.”

If you wish to commence possession proceedings or if you are facing possession proceedings, then please contact Property Litigation Partner, Hayden Glynn, on 0113 2802032 or hayden.glynn@luptonfawcett.law for further help or advice

Please note this information is provided by way of example and may not be complete and is certainly not intended to constitute legal advice. You should take bespoke advice for your circumstances.

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