Consumer credit lenders will have to start providing tailored support for borrowers tomorrow after today’s deadline to apply for a payment deferral ends.
According to Financial Conduct Authority (FCA) guidance, only consumers who are still in a payment deferral arrangement on 31 March will be able to extend their payment deferral beyond that date, and all deferrals under that guidance will end by 31 July 2021 at the latest.
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From 1 April, consumers who are newly impacted by the Covid-19 crisis, or find themselves impacted again, should receive tailored support from their lender.
This provides a longer-term framework for firms to offer a wider range of options which are tailored to a consumer’s individual needs and circumstances.
Under the regulator’s guidance, consumer credit lenders have been allowed to repossess goods and vehicles from 31 January, but only as a last resort and following public health guidelines and regulations when taking repossessions.
The FCA has also published initial findings from its supervisory work on consumer credit guidance, which revealed that consumers have generally been able to get support as they come to the end of a payment deferral.
The regulator has not identified any systemic issues with firms’ ability to meet the demand from customers seeking further help, with the support identified in the report typically being for the short-term given the uncertainty of customers’ financial circumstances during the pandemic.
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It found that all firms assessed had vulnerable customer policies in place, and it was noted that 94 per cent of mortgage firms and 64 per cent of credit firms had either reviewed or added to them in light of the Covid-19 crisis.
The FCA encouraged firms to review its guidance on vulnerable customers and to embed relevant aspects into their processes to ensure that vulnerable customers are treated fairly.
The regulator said some firms anticipated an increase in demand from customers in financial difficulty due to the pandemic and recruited more staff to address that demand and as a result, there has been a significant increase in inexperienced staff helping customers, which may lead to an increased risk of harm.
The FCA expects firms to ensure that all their staff are adequately trained and have appropriate oversight of new staff to ensure that the right support is provided to customers.
The regulator found that firms have accelerated plans to automate aspects of the customer support journey and in general these automated approaches were easy to navigate with minimal steps and helpful menus for customers to select from.
However, it said some firms could make some improvements, particularly around the ease of access to non-digital support.