MCOB 13

MCOB 13 imposes detailed obligations on lenders: develop and implement a written policy for arrears handling (MCOB 13.3); make and keep records of the steps taken; consider specific forbearance options (payment holiday, interest-only switch, capitalisation, term extension); not initiate possession proceedings as a first response; give borrowers information about free debt advice. Specific to regulated mortgage contracts. The FCA can fine for breaches; affected borrowers can claim through the FOS, which can award up to £455,000 on complaints referred from 1 April 2026 about acts on or after 1 April 2019.

In practice, MCOB 13 gives you something concrete to ask for when you fall behind. Rather than pleading for leniency, you can point to the specific forbearance options the lender is required to consider and ask, in writing, which of them it has considered in your case and why each was rejected. A lender must also not repossess unless all other reasonable attempts to resolve the position have failed, which is a high bar and one it has to be able to evidence.

Worked example: Sam loses a contract and misses two mortgage payments. He contacts the lender early, explains the cause, and sends an income and expenditure statement showing he can pay the normal instalment plus a modest amount towards arrears once a new contract starts in three months. He asks the lender to consider a temporary switch to interest only, a term extension, and capitalisation of the arrears once he is back on track. The lender must consider each, must not add charges that are unfair or that it cannot justify as reflecting actual costs, and must give him a reasonable period to make good the arrears — reasonable is assessed against the remaining term of the mortgage, not an arbitrary six months.

The pitfalls are avoidable. Do not stop communicating: lenders escalate silence far faster than they escalate a documented, realistic proposal. Do not agree to an arrangement you cannot keep, because a broken arrangement damages your position at any later hearing. Second-charge loans and most buy-to-let mortgages sit outside parts of the regime, so check whether the agreement is a regulated mortgage contract before relying on MCOB 13. And a Financial Ombudsman complaint runs alongside, not instead of, defending a possession claim — the court timetable will not wait.

MCOB 13 works with the pre-action protocol for mortgage possession claims, is enforced by the FCA, and gives grounds for a complaint to the Financial Ombudsman Service. Read our guides to mortgage arrears and defending repossession, and get free debt advice before the first hearing.