FCA proposes extending motor finance payment freeze scheme for three months

Christopher Woolard, interim chief executive at the FCA, said: ‘It is vital that people facing temporary payment difficulties because of the impact of coronavirus get the assistance they need. For those who have already taken a payment freeze and can afford to start making payments, even partially, it is in their best interest to do so, but for those that need help it will be there.’

The proposals include:

• At the end of a first payment freeze, firms should contact their customers to find out if they can resume payments – and if so, agree a plan on how the missed payments could be repaid. If customers can afford to return to making regular repayments it is in their best interest to do so.
• Firms should 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.
• Extending the time the scheme is available to people who may be impacted at a later date – customers that have not yet had a payment freeze, would be able to request one up until 31 October 2020.
• The ban on repossessions should continue until 31 October 2020 – this applies to motor finance and RTO customers still facing temporary payment difficulties as a result of coronavirus and who need their vehicles or goods.
• 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. However, consumers should remember that credit files aren’t the only source of information which lenders can use to assess creditworthiness.

Consultation will close on July 6 and guidance will follow shortly afterwards.

 Please send your comments to: FCAconsumercredit@fca.org.uk

The announcement comes as the FCA confirms the introduction of similar measures in the consumer finance market following a short consultation last month.