The City regulator has proposed that consumer credit firms should be able to repossess goods and vehicles as a last resort from the end of the month.
The current guidance is that firms should generally not enforce repossessions against consumer credit customers before 31 January 2021, unless in exceptional circumstances.
The Financial Conduct Authority (FCA) has proposed changing this so consumer credit firms will be able to repossess goods and vehicles from 31 January.
However, the regulator said this should only be a last resort, subject to complying with relevant government public health guidelines. It added that firms should consider the impact on customers, particularly those who are vulnerable.
The FCA has invited comments on the draft guidance by 10am on 18 January 2021.
“Our proposed approach reflects the different risks and harms that customers with goods or vehicles on credit are likely to face compared to those who are at risk of losing their home,” the FCA said.
“For customers who remain in payment difficulties under a relevant consumer credit agreement, continuing to restrict repossessions may not be in their interests.
“The shorter terms and higher interest rates on these agreements, combined with the depreciating value of the goods or vehicles, means that they could end up owing more in the long term if repossessions are prevented.
“Our approach, therefore, takes appropriate account of the risks to customers of further asset depreciation, whilst providing appropriate protections by ensuring that firms repossess only as a last resort and also consider the impact of repossession action on those who are vulnerable, as well as following relevant government public health guidelines and regulations when undertaking repossession action.”