The Financial Conduct Authority (FCA) has announced proposals to provide continued support for users of motor finance and high cost credit products, amid the pandemic.
The proposals outline the options firms will provide motor finance, buy-now pay-later (BNPL), rent-to-own (RTO) and pawnbroking customers who are coming to the end of a payment freeze, as well as those who are yet to request one.
For customers yet to request a payment freeze, the time to apply for one would be extended until 31 October 2020.
For motor finance, BNPL, RTO and pawnbroking customers that have already taken up support, and who are still experiencing payment difficulties, firms would continue to offer support with options including a further payment deferral or reducing payments to an amount the customer can afford for a further three months, the FCA said.
“It is vital that people facing temporary payment difficulties because of the impact of coronavirus get the assistance they need,” said Christopher Woolard, interim chief executive at the FCA.
“For those who have already taken a payment freeze and can afford to start making payments, even partially, it is in their best interest to do so, but for those that need help it will be there.”
The FCA said where a customer needs further temporary support to bridge the crisis, any payment freezes or partial payment freezes offered under this guidance should not have a negative impact on credit files.
The regulator said it welcomes comments on these proposals until 5pm on 6 July 2020 and expects to finalise the guidance shortly afterwards.
Adrian Dally, head of motor finance at the Finance & Leasing Association, welcomed the proposals.
“The breadth of today’s guidance from the FCA recognises the variety of different situations that customers will be in at this point,” said Dally.
“With more parts of the economy reopening, many customers will be returning to work and will be able to resume full payments. For those returning to part time work, partial payments are an option.
“Customers who still need ongoing help will of course be supported.
“Motor finance lenders have been providing unprecedented levels of forbearance to customers since the start of the crisis, but it is now time for the government to support the industry so that it is able to continue to offer finance to consumers and businesses at affordable rates during the recovery.”
The FCA recently confirmed similar rules for consumer credit customers affected from Covid-19.