The Financial Conduct Authority (FCA) wants to clarify its rules on payment shortfalls after it detected some lenders were not behaving in the way the Mortgage Market Review (MMR) intended.
The regulator wants to ensure fees from payment shortfalls are used to pay off debt balances rather than interest or charges. A payment shortfall is the outstanding amount measured against the amount of payments which have become due during the term of a regulated mortgage contract. It does not include outstanding amounts (other than missed monthly instalments) of capital or interest. The MMR, which was the mortgage market's equivalent of the Retail Distribution Review, required firms to allocate a customer's payments to paying off arrears before charges. This was designed to he...
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