What the requirement means
Forbearance means considering a proportionate change or accommodation for a consumer in or approaching repayment difficulty rather than treating escalation as inevitable. In the UK, FCA CONC 7.3.4R requires regulated firms within its scope to treat customers in or approaching arrears or in default with forbearance and due consideration. Distinguish the relevant current requirement from supervisory guidance and future rules. A documented legal basis is especially important when one provider services products in several jurisdictions. UK FCA CONC rules do not apply automatically to every EU borrower. The presence of a contractual hardship clause is also not enough to demonstrate that the firm has carried out the individual consideration demanded by its applicable conduct rules. The file should state who has authority to make a decision and where the result can be challenged or reviewed.
Assessing the individual case
FCA CONC 7.3.4B requires account to be taken of the customer's individual circumstances that the firm knows or should know. Staff should distinguish a temporary cash-flow problem from enduring inability to service the agreement, including any risk created by charges, interest or a proposed arrangement. Audit a sample of actual customer cases rather than relying only on a policy. Compare the information available at the time with the option offered and inspect notices and account movements afterward. Pay particular attention to whether automated recovery action continued after a forbearance decision. Supervisory evidence should show consistent routing, clear explanations and a reasoned outcome, without treating consistency as a reason to ignore different personal circumstances. A short review memo can identify the responsible staff member, applicable rule, exception and follow-up date.
Available responses and boundaries
CONC 7.3.5 gives examples including reducing interest and charges, payment deferral, reduced or token payments and repayment arrangements. These are examples considered as appropriate, not an unconditional right to any particular concession; the firm must assess suitability and applicable rule wording. Distinguish the relevant current requirement from supervisory guidance and future rules. A documented legal basis is especially important when one provider services products in several jurisdictions. UK FCA CONC rules do not apply automatically to every EU borrower. The presence of a contractual hardship clause is also not enough to demonstrate that the firm has carried out the individual consideration demanded by its applicable conduct rules. The file should state who has authority to make a decision and where the result can be challenged or reviewed.
Cost and repayment consequences
Under CONC 7.3.5G, when a borrower is meeting a forbearance repayment arrangement, the firm must reduce, waive or cancel further interest and charges to the extent necessary to prevent the debt level from rising during the arrangement. A servicing system must be tested against this specific rule, not just configured to freeze all interest indiscriminately. Audit a sample of actual customer cases rather than relying only on a policy. Compare the information available at the time with the option offered and inspect notices and account movements afterward. Pay particular attention to whether automated recovery action continued after a forbearance decision. Supervisory evidence should show consistent routing, clear explanations and a reasoned outcome, without treating consistency as a reason to ignore different personal circumstances. A short review memo can identify the responsible staff member, applicable rule, exception and follow-up date.
Reviewing an arrangement
A decision file should link affordability information, communications, proposed alternatives, impacts on the balance, approval and review dates. Reassess an arrangement when new information changes the customer's circumstances; CONC 7.3.5I requires reasonable steps to ensure ongoing appropriateness. Distinguish the relevant current requirement from supervisory guidance and future rules. A documented legal basis is especially important when one provider services products in several jurisdictions. UK FCA CONC rules do not apply automatically to every EU borrower. The presence of a contractual hardship clause is also not enough to demonstrate that the firm has carried out the individual consideration demanded by its applicable conduct rules. The file should state who has authority to make a decision and where the result can be challenged or reviewed.
CCD2 and national implementation
In the EU, Article 35 of Directive (EU) 2023/2225 provides a revised forbearance framework, with national measures generally applicable from 20 November 2026. It is separate from the UK's established CONC framework. The Directive requires appropriate reasonable measures before enforcement but does not mandate the same option in every case. Audit a sample of actual customer cases rather than relying only on a policy. Compare the information available at the time with the option offered and inspect notices and account movements afterward. Pay particular attention to whether automated recovery action continued after a forbearance decision. Supervisory evidence should show consistent routing, clear explanations and a reasoned outcome, without treating consistency as a reason to ignore different personal circumstances. A short review memo can identify the responsible staff member, applicable rule, exception and follow-up date.
Documentation and testing
Test workflows using missed-payment errors, a short income interruption, fluctuating earnings, contact from a debt adviser and an arrangement no longer affordable. Record why an intervention was chosen and what the consumer was told, without claiming that a lender is bound to forgive principal in every difficulty case. Distinguish the relevant current requirement from supervisory guidance and future rules. A documented legal basis is especially important when one provider services products in several jurisdictions. UK FCA CONC rules do not apply automatically to every EU borrower. The presence of a contractual hardship clause is also not enough to demonstrate that the firm has carried out the individual consideration demanded by its applicable conduct rules. The file should state who has authority to make a decision and where the result can be challenged or reviewed.
Frequently asked questions
Must the lender offer every type of forbearance?
No. The appropriate response depends on the circumstances and applicable rules.
When do revised CCD2 national provisions generally apply?
From 20 November 2026, subject to relevant national implementing measures and transitions.
Primary sources
FCA Handbook CONC 7.3 ↗Directive (EU) 2023/2225 ↗Read the source in its current version. National implementing measures and product-specific applicability may require additional research.