The City regulator confirmed its proposals that consumer credit firms can 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, unless in exceptional circumstances.
The Financial Conduct Authority (FCA) has now finalised its guidance issued earlier this month, confirming that firms will be able to repossess goods and vehicles from 31 January 2021, but only as a last resort and subject to compliance with public health guidelines and regulations.
The FCA said firms will also need to consider the potential wider impact on vulnerable customers, including when deciding whether repossession of goods or vehicles is appropriate because of the coronavirus crisis.
“Our 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 at this time,” the FCA said.
The regulator highlighted that consumers have until 31 March 2021 to apply for a payment holiday for a range of products.
These include: mortgages, personal loans, credit cards, store cards and catalogue credit, motor finance, including hire-purchase and leasing agreements, rent-to-own, buy now pay later, pawnbroking agreements and high-cost short-term credit.
Consumers can request a payment holiday of up to six months in total, but lenders can only agree a payment holiday of up to three months at a time, or one month only for high-cost short-term credit customers.
If a borrower applies by 31 March, they may be able to extend up to 31 July when all payment holidays will come to an end.
The FCA added that the lender should be in touch before the holiday ends to see if they need help and if the consumer is coming to the end of their payment freeze and still experiencing difficulties in keeping up with repayments, the lender should provide tailored support.