* Mandatory mortgage support set to end on Oct. 31
* Lenders encouraged to offer further forbearance
* Over 1.9 million borrowers using scheme
(Adds Bank of England guidance)
LONDON, Aug 26 (Reuters) - Britain's financial watchdog has
called on banks to continue supporting homeowners struggling to
pay their mortgages due to the COVID-19 pandemic, after saying
it expected its requirement for lenders to offer repayment
holidays to expire on Oct. 31.
The FCA had extended the scheme, which allows mortgage
customers to defer payments if they have been impacted by the
coronavirus, for a further three months from its original June
end-point.
The regulator said lenders should consider a range of
alternative support measures for customers in financial
difficulty, including extending repayment terms, but stopped
short of requiring firms to offer such support.
"We are proposing that firms contact their borrowers in good
time before the end of a payment holiday, and work with them to
come up with a tailored plan to help get them back on track,"
the FCA's Interim Chief Executive Christopher Woolard said.
The watchdog said it is asking for comments from banks and
other stakeholders before publishing finalised guidance in early
September.
More than 1.9 million borrowers have taken advantage of the
scheme to delay payments since it was launched in March.
Britain's central bank separately said on Wednesday it
expected lenders to take a closer look at the credit risk
implications of COVID-related loan repayment deferrals as the
scheme is phased out.
The Bank of England said tailored support measures brought
in as the payment holiday scheme ends would be as good an
indicator of increased credit risk as forbearance was before the
pandemic.
The FCA on Wednesday proposed that borrowers coming to the
end of a payment holiday who were in need of further support
after the end of October would have that fact reflected on their
credit files.
Customers who apply for a three-month payment deferral
before the end of October should be granted one lasting until
the end of January, the FCA said.
(Reporting By Lawrence White and Iain Withers; Editing by
Sinead Cruise and Jan Harvey)