The Financial Conduct Authority (FCA) has proposed a series of measures to provide ‘further support’ to consumers affected by coronavirus.
Among the proposals, payment deferrals for motor finance will be extended along with support for personal loans.
The news comes after Finance and Leasing Association (FLA) director general Stephen Haddrill called the decision to allow credit customers to defer payments for up to six months ‘dangerous’.
The proposals will be mean that those who have not yet had a payment deferral will be eligible for two payment deferrals of up to six months in total, and those who currently have an initial payment deferral, will be eligible for a further payment deferral of up to three months.
Meanwhile, high-cost short-term credit (HCSTC) consumers, such as those with payday loans, who have not yet had a payment deferral would be eligible for a payment deferral of one month.
The FCA is urging consumers not to contact their lender until the enhanced measures are in place. It says lenders will soon provide further information.
Under the FCA’s proposals, borrowers would have until January 31, 2021 to request an initial payment deferral.
The FCA says a payment deferral under its proposals would not be reported as missed payments on a borrower’s credit file, thereby consumers’ ability to access credit will be unaffected in future.
Sheldon Mills, interim executive director of strategy and competition at the FCA said: ‘We recognise the challenges that many consumers face as the coronavirus crisis develops, and we are working to ensure support remains available to consumers who need it.
‘We know that many consumer credit borrowers are vulnerable. That’s why tailored support reflecting borrowers’ individual circumstances will still be offered and remains the most appropriate option for many.
‘We are also proposing to extend payment deferrals for some consumer credit products to offer additional support.
‘It is in borrowers’ own long-term interest only to take a payment deferral when absolutely necessary. Those that are able to keep paying, should do so.
‘We are also asking borrowers not to contact their lender yet, and instead wait for further updates, including from their lenders, soon.’
The FCA is asking for comment on the proposals by 10am on November 6, 2020 with the final guidance published as soon as possible after the comment period closes.
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