Car finance customers and high-cost credit borrowers struggling during the pandemic will continue to receive support, under new rules confirmed by the City regulator.
At the start of the month, the Financial Conduct Authority (FCA) set out proposals outlining the options that lenders should provide motor finance, buy-now pay-later (BNPL), rent-to-own (RTO) and pawnbroking customers who were coming to the end of a payment freeze. They also covered those who were yet to request one.
The FCA confirmed it is going ahead with the rules, which are set to come into force from 17 July.
For customers that have not yet requested a payment freeze, the time to apply for one will be extended until 31 October 2020.
Firms should contact customers coming to the end of a first payment freeze to find out if they can resume payments, and if so, agree a plan on how the missed payments could be repaid, the FCA added.
The regulator said for motor finance, BNPL, RTO and pawnbroking customers that have already utilised 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.
“Our measures will ensure that people who are still facing temporary payment difficulties because of this pandemic, continue to have access to the help they need,” said Christopher Woolard (pictured), interim chief executive at the FCA.
“However, if you can afford to start making repayments, you should.”
The FCA said for pawnbroking agreements, where a loan is within the redemption period firms should extend this and if it has already ended, they should agree not to sell the item during the payment deferral period.
And for motor finance customers, the ban on repossessions will continue until 31 October 2020 for customers still facing temporary payment difficulties due to the Covid-19 crisis.
The regulator said that firms should be aware of the needs of vulnerable customers and highlighted that any payment freezes or partial payment freezes under this coronavirus support will not have a negative impact on credit files.
Adrian Dally, head of motor finance at the Finance & Leasing Association, welcomed the rules and the regulator’s message that those customers who can resume full or partial payments should do so.
“This is particularly important to prevent customers accruing unsustainable levels of debt, but also to allow further support to be given to those most in need,” he said.
At the start of July the FCA confirmed similar rules for consumer credit customers impacted by Covid-19.