Enhanced support for people having problems paying their motor finance because of Covid-19 was made official by the Financial Conduct Authority today (Nov 19).
The conduct regulator confirmed that the updated guidance to firms, which it set out at the beginning of November, should be available to consumer credit customers who had been affected financially.
It comes into effect on Wednesday, November 25 but the FCA said firms that were able to start giving the enhanced support sooner should do so.
As well as motor finance, the guidance covers people with personal loans, credit cards, store cards, catalogue credit, rent to own, buy now pay later, pawnbroking, plus high-cost short-term credit.
The FCA also emphasised that people should keep up payments on their loans or credit products if they could afford it, and should only ask for a deferral if it was really necessary.
The guidance says:
- Those who haven’t yet had a deferral can apply for them for up to six months
- Those who currently have a deferral can apply for another one if the total length doesn’t exceed six months
- Those who previously had a deferral of less than six months can also apply for another deferral so long as they don’t exceed six months
- Firms can assess that a deferral isn’t in a customer’s interest – if that happens, tailored support appropriate to the customer’s circumstances should be provided instead
- People who’ve already had six months of deferrals or are in arrears or are receiving tailored support won’t be eligible for a further deferral but firms will provide tailored support appropriate to their circumstances, which could include an option to defer further payments
- High-cost short-term credit consumers, such as those with payday loans, will be eligible for a payment deferral of onemonth
Sheldon Mills, interim executive director of strategy and competition at the FCA, said: ‘It is in a consumer’s best interest to only take a payment deferral when absolutely necessary. Those that are able to keep paying should do so.
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‘However, for those continuing to face payment difficulties as a result of coronavirus, these measures will ensure they continue to be able to access much-needed support during this crisis.
‘We also want to highlight that tailored support will still be offered and remains the most appropriate option for many borrowers.’
People have until March 31, 2021 to apply for a first or further deferral. After then, they’ll be able to extend existing deferrals to July 31, 2021 if those extensions cover consecutive payments, subject to the maximum six months allowed.
The FCA also said that a deferral under today’s finalised guidance wouldn’t be reported as missed payments on a consumer’s credit file.