In a review which covered information from eight mortgage lenders, the regulator clarified the need for early and frequent communication with the customer according to the potential risk of non-repayment, making sure that enough time was given to consider maturity options.
The report emphasises that, while customers are ultimately responsible for their loans and mortgage lenders are not obliged to offer options at maturity, firms should be able to consider what options they are willing to offer those who are unable to pay.
Examples of these options included switching the mortgage to a full or part capital-repayment basis, extending the mortgage term, or accepting overpayments.
The document also specified that there should be documented guidance for front-line staff and to ensure they had enough knowledge and training to deal with customers who have interest-only mortgages.
The new guidance on treating interest-only customers fairly will come into effect with the Mortgage Market Review, on 26th April 2014.
