Increased support for people with car finance payment issues due to Covid-19 was formalized by the Financial Conduct Authority today (November 19).
The pipeline regulator has confirmed that the updated business guidelines, which it issued in early November, should be made available to consumer credit customers who have been financially affected.
It goes into effect on Wednesday, November 25, but the FCA has said companies that were able to start providing the enhanced support earlier should do so.
In addition to auto financing, the guidelines cover people with personal loans, credit cards, store cards, catalog credit, rent with purchase option, buy it now, pay later, loan on pawn and short-term credit at high cost.
The FCA also stressed that people should continue to repay their loans or credit products if they can afford it, and should only request a deferral if it is really necessary.
The guide says:
- Those who have not yet benefited from a deferral can apply for up to six months
- Those who currently have a deferral can request another if the total duration does not exceed six months
- Those who have already had a deferral of less than six months can also request another deferral as long as they do not exceed six months.
- Businesses may assess that a postponement is not in a client’s best interest – if this happens, tailor-made assistance tailored to the client’s situation should be provided instead
- People who have already had six months deferral or are in arrears or are receiving tailor-made assistance will not be eligible for another postponement, but companies will provide tailor-made assistance tailored to their situation, which could include an option for defer other payments
- Consumers of high-cost short-term credit, such as those with payday loans, will be entitled to a one-month deferral of payment
Sheldon Mills, Acting Executive Director of Strategy and Competition at FCA, said: “It is in the consumer’s best interest to only take a payment deferral when absolutely necessary. Those who are able to continue paying should do so.
“However, for those who continue to experience payment difficulties due to the coronavirus, these measures will ensure that they will continue to be able to access the support they so badly need during this crisis.
“We also wish to emphasize that tailor-made support will always be offered and remains the most appropriate option for many borrowers.”
People have until March 31, 2021 to request a first postponement or another postponement. After this date, they will be able to extend the existing deferrals until July 31, 2021 if these extensions cover consecutive payments, subject to the maximum of six months allowed.
The FCA also said a deferral under today’s finalized guidelines would not be flagged as missed payments on a consumer’s credit report.