The Analysis News & Opinions
Regulator new takes mortgage step
Opinion
More furlough employment support is needed
The government’s ‘Job Retention Bonus’ could do little to prevent job losses, according to our new survey figures. Less than one in five business leaders who
had furloughed staff said the £1,000 grant would help them keep hold of their people. Only 3% said that it would have a substantial effect on their firm’s ability to retain employees. Despite this, just over half of the directors
surveyed were positive about being able to contribute to furloughed workers’ salaries until October. However, 28% said they were pessimistic
about their organisation's ability to sustainably meet the additional costs. To help prevent a surge in unemployment,
The Financial Conduct Authority (FCA) has announced proposals to ensure that firms provide tailored support to mortgage borrowers who continue to face payment difficulties due to coronavirus. During the initial phase of the pandemic,
payment holidays provided mortgage borrowers with immediate and temporary support. They have helped millions of consumers
through the immediate impacts of the current emergency and helped firms provide support at unprecedented scale. The majority of customers who have had
a payment holiday are expected to resume full repayment. However, many will remain in financial difficulty. The FCA published additional draft
guidance for firms, to ensure that consumers – both those who have benefitted from payment deferrals under the current guidance who continue to face financial dif- ficulties, as well as those whose financial situation may be newly affected by coronavirus after the current guidance ends – get the support they need in these extraordinary times.
September 2020 The draft guidance proposes that firms
should consider the appropriateness, and use, of a range of different short and long- term support options to reflect the specific circumstances of their customers. This could include extending the repayment term or restructuring of the mortgage. Where consumers need further short-term
support, firms should offer arrangements for no or reduced payments for a specified period to give customers time to get back on track. Christopher Woolard, Interim chief
executive at the FCA, said: “It is important that consumers who can afford to resume mortgage payments should do so. However, we understand that borrowers facing payment difficulties because of the pandemic will continue to face uncertainty and may also experience temporary interruptions in income. “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. Firms should not take a ‘one size fits all’ approach.”
www.CCRMagazine.com
we are calling on the Treasury to act quickly to support jobs. We have recommended cutting the burden of employment taxes, for instance by increasing the Employment Allowance for small businesses, or increasing the salary threshold for Employers’ NICs. More generally, some form of an extension to the furlough scheme should remain on the table. As the furlough scheme winds down, job
losses are starting to mount. The Job Retention Bonus is just a sticking plaster, and is unlikely to give many businesses the support needed to retain staff. For many businesses, demand is still
uncertain, and social distancing puts a lid on growth prospects. Firms are having to adjust to the fact that this situation could last for some time. The Treasury must step up to the plate
quickly. Urgent support for jobs is crucial, firms must be put in a position to hold onto and hire staff. Cutting employment taxes will be crucial to flatten the surge of unemployment that’s expected later in the year.
Tej Parikh Chief economist, the Institute of Directors,
7
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40 |
Page 41 |
Page 42 |
Page 43 |
Page 44 |
Page 45 |
Page 46 |
Page 47 |
Page 48 |
Page 49 |
Page 50 |
Page 51 |
Page 52