The Financial Conduct Authority (FCA) has confirmed the support that will be available for users of motor finance products, who continue to face payment difficulties due to coronavirus.
Christopher Woolard, interim chief executive at the FCA, said: “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. However, if you can afford to start making repayments, you should.”
The measures include:
- If customers can afford to return to regular repayment, or make partial payments, it is in their best interest to do so.
- 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.
- For customers still facing temporary payment difficulties as a result of coronavirus, firms will provide them with support by freezing or reducing payments to a level they can afford, on their motor finance, BNPL or RTO agreements for a further three months.
Customers that have not yet had a payment freeze or requested an extension of an existing payment freeze can request this up until 31 October 2020.
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, said the FCA. However, consumers should remember that credit files aren’t the only source of information which lenders can use to assess creditworthiness.
When implementing this guidance, the FCA said firms should be particularly aware of the needs of their vulnerable customers and should consider how they engage with them. Firms should also help customers understand the types of debt help and money guidance that are available and encourage them to access the resources that can help them.
The guidance comes into force on 17 July 2020.