ISA and mortgage rules have been changed today – check on your accounts now

ISA savings are protected from certain taxes and in May the government announced that they would alter some of the rules for Lifetime ISAs (LISA) in light of coronavirus. Additionally, the FCA recently revealed that mortgage holiday rules would be extended into the coming months.


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Both of these changes come into force from today.

In mid-May the government announced that the penalty imposed on LISA holders for making early withdrawals would be reduced.

Originally it was 25 percent but this has been lowered to 20 percent, with the official law coming into force today.

The amendment made to the Individual Savings Account Regulations 1998 inserted the following: “5A. Notwithstanding paragraph five, the specified percentage in respect of the period beginning on 6th March 2020 and ending on 5th April 2021 is 20 percent.”

Mortgage holiday rules have also been extended in recent weeks.

After a brief consultation period, the FCA confirmed this week that mortgage holidays will be able to be requested up until October 31.

The guidance that the regulator set forward comes into force today, meaning the lenders must comply with the new rules.

The extension made was not the only element targeted by the FCA.

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The FCA additionally confirmed the following:

  • The current ban on lender repossessions of homes will be continued to 31 October 2020. This will ensure people are able to comply with the government’s policy to self-isolate if they need to.
  • Firms will communicate with customers regarding what happens when their payment holiday ends. They should offer a range of options for how the missed payments will be repaid, if they are able to resume payments.
  •  Lenders will continue to support customers who have already had a payment holiday where they need further help. Firms should contact their customers to find out what they can re-pay and, for those who remain in temporary financial difficulty, offer further support, which will include the option of a further three-month full or part payment holiday.
  • Payment holidays offered under this guidance will not have a negative impact on credit files. However, consumers should remember that lenders may use information obtained from other sources, such as bank account information, in their lending decisions.


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With all the new rules in place some people may, understandably, be confused with where they stand.

Thankfully, there are a number of supportive options available that consumers can turn to for impartial advice.

The Money Advice Service, Citizens Advice and the Money Advice Trust are all examples of public institutions that can help people manage and understand their financial affairs.

This is on top of the government’s own website which is regularly being updated with the latest coronavirus themed changes.

Citizens Advice themselves responded to the holiday extension announcement and while they were supportive, they also called on the government to provide additional protections for renters.

These suggested measured included:

  • Accelerating the process to end section 21 ‘no fault’ evictions
  • Putting in place temporary changes allowing the courts more discretion for tenants in arrears because of coronavirus
  • When these measures are in place, implementing a ‘pre-action protocol’ of steps that landlords must follow before they can bring possession proceedings

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