Martin Lewis: The new mortgage 'forbearance' help – how big a change is it, is it mandatory?

Q. Has anything really changed here?
Some lenders are saying "we do this anyway" – there's some truth in that, but it can be misleading. Many lenders offer tailored forbearance measures, pushed for by the regulator, that they can put in place when someone is struggling, yet they all do it differently and there are no hard and fast rules. Indeed, we want such tailored measures to continue, but this is something slightly different.

Under the new agreement, firms will give what is effectively a right to all mortgage borrowers with regulated firms, who are up to date with payments, but struggling...

The fact this is automatically available from all lenders who've agreed and that it will categorically not impact your credit file is the change. It's worth noting that, especially in the case of term changes, some firms would've seen that as a contractual change, thus not impacted your credit file, but here you have certainty in advance.

This is important both in practice and because it means there can be a clear, universal (sort of, more below) charter of rights for all mortgage holders.

Q. Are there any other changes?
Lenders have also agreed not to push repossessions within a year of the first missed payments, unless the mortgage holder agrees to it.

Also, from 10 July firms have agreed to commit to offering the borrower a new rate six months out from the end of their fix, and the option to switch to a different deal with the same lender if a better option is available before the end of their current deal. This has often been done in the past, but now it is a firm commitment.

It's also been prominently said that you can now "talk to your lender without any credit score impact". That isn't a change at all, though I know the banks were very keen for the message to be put out that people should ask them for help when struggling (a message I support). I suspect this was just seen as an opportunity to get that message out.

Q. Is the new scheme mandatory?
This is pretty nuanced. Initially, we were told that technically the agreement only covers lenders that were in the room, which includes the chief executives of Lloyds Banking Group, Virgin Money, Santander, HSBC, NatWest Group, Nationwide and Barclays – though that covers a very substantial majority of UK mortgages.

However, other lenders have now also signed up to it, including TSB and many major building societies. You can see the full list in the Charter document on pages 11 and 12. This covers 85% of the mortgage market.

The FCA (which, let's be plain, is what really counts from now on – as the politicians will move on, but the regulator is the one that'll be managing this) tells me that in order to put this in practice it will need to make some enabling changes, some to the rules and some to the guidance. It says much of that should happen this week.

Once that is done, the FCA expects it to be common practice and other lenders to follow suit. Yet even if not, it says that under the new consumer duty starting this July, where all firms will have to be mindful of consumer outcomes, in practice it will expect to see the same outcomes, so in effect this will be mandatory (though we will be keeping an eye to ensure that we monitor any lenders that aren't playing ball).

Also as the Ombudsman adjudicates based on standard industry practice, and this will certainly be that, the likelihood is if necessary (let's hope it doesn't get there) this would be enforceable that way.