FCA Forbearance Requirements: What Your Lender Must Do
Second charge mortgages are regulated under the FCA's Mortgage and Home Finance Conduct of Business sourcebook (MCOB) and, since July 2023, subject to the heightened standards of the Consumer Duty. These rules place specific obligations on lenders when a borrower is struggling with repayments. A lender cannot simply issue a repossession claim because a payment has been missed — they must first follow a structured forbearance process.
MCOB requires that when a borrower falls into arrears, the lender must: contact the borrower promptly; consider any request for a payment arrangement fairly; provide clear information about the arrears position and the options available; and not start possession proceedings while a customer is cooperating with a reasonable forbearance arrangement. Consumer Duty adds to this by requiring lenders to proactively identify customers in financial difficulty and take positive steps to support them.
In practice, a lender who jumps straight to legal action without following the MCOB forbearance process is likely to find a court unsympathetic. Courts will almost always require evidence that the lender has genuinely tried to help before granting a possession order. If your lender is not engaging with you or is acting unreasonably, you have the right to complain to the Financial Ombudsman Service, which can order the lender to reconsider its approach.
The Repossession Process: Timeline and What to Expect
Even in the worst-case scenario, repossession through a secured loan is a lengthy process. The typical timeline from first missed payment to physical repossession is 12 months or more, and often considerably longer if the borrower is engaging with the lender or pursuing legal challenges. This is not an excuse to do nothing — but it does mean you have time to act and that acting promptly matters.
The typical sequence is: missed payments and arrears accumulation (months one to three); lender issues formal default notice under the Consumer Credit Act (28 days to remedy); arrears continue and lender applies to court for a possession order; court hearing scheduled (typically two to four months after application); possession order granted (if the borrower does not attend or has no compelling case); bailiff warrant sought and enforcement carried out. At each stage, the borrower has opportunities to engage, propose repayment arrangements, and seek legal representation.
Courts in the UK have wide discretion to suspend possession orders if the borrower can demonstrate a realistic prospect of clearing the arrears. A suspended possession order allows you to remain in your home provided you continue to make current payments plus an agreed amount towards the arrears. Engaging a housing solicitor or a debt adviser to help you at the court hearing stage can make a significant difference to the outcome.
