The City regulator will be going ahead with rules requiring pawnbroking firms to offer a three-month payment freeze to customers facing difficulties due to Covid-19, amid concerns from peer-to-peer pawnbroker Unbolted.
Unbolted has criticised the Financial Conduct Authority’s (FCA) proposals, arguing that they would be detrimental to its retail investors.
Unbolted’s co-founder Rito Haldar said that in its normal course of business, the platform applies forbearance to all borrowers who genuinely intend to renew or redeem their loan contracts but are faced with temporary financial difficulties.
He said the policy, which is also in the interests of the platform’s lenders, has been expanded in response to Covid-19.
“We have worked at pace to introduce temporary financial relief tailored for a range of specific credit products,” said Christopher Woolard, interim chief executive at the FCA.
“Many firms are already working with their customers, but these measures ensure all consumers affected by the coronavirus emergency can apply for a temporary freeze on their payments.”
The three-month payment freeze also covers motor finance, buy-now pay-later, rent-to-own and pawnbroking agreements.
The regulator said pawnbrokers should extend the redemption period for the three-month freeze period or, if the redemption period has already ended, agree not to serve notice to sell an item that has been pawned for that period.
The FCA said that if the firm has already informed the consumer they intend to sell the item, they should suspend the sale during the payment freeze.
This month the regulator also froze regulatory fees for firms it regulates and announced it is going ahead with new rules requiring personal loan providers to offer temporary payment freezes to borrowers affected by the pandemic.