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FCA introduces second payment freeze for struggling finance customers

Time 1 year ago

Finance customers struggling to meet payments can apply for a second three-month freeze or a cut, the Financial Conduct Authority (FCA) has announced.

The organisation has said those customers who are struggling with cash because of coronavirus and who haven’t applied for a ‘payment holiday’ or asked for an extension, can apply for one up to October 31.

Running in tandem will be a ban on repossessions until October 31, too.



The FCA says finance firms should contact customers coming to the end of the first payment freeze to establish whether they can continue with payments. If not, they should agree a plan on how missed payments can be made.

Support will be available for users of motor finance, buy-now pay-later (BNPL), rent-to-own (RTO), pawnbroking and high-cost short-term credit (HCSTC) products.

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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.’


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The FCA says firms should be aware of ‘the needs of their vulnerable customers and should consider how they engage with them’, and that they ‘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 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:
    1. 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.
    2. For BNPL customers, where a loan is within the promotional period, this will mean offering customers an additional extension to that period.
    3. For pawnbroking agreements, where a loan is within the redemption period (irrespective of when the redemption period is due to end) this will mean firms offering a further extension to the redemption period. If the redemption period has already ended, this will mean agreeing not to sell the item during the payment deferral period.
  • Customers that have not yet had a payment freeze or requested an extension of an existing payment freeze can request this up until October 31, 2020.
  • HCSTC customers can only apply for a payment freeze under this guidance once up to October 31, 2020 in respect of each HCSTC agreement. For those customers who have had a payment freeze and are still experiencing payment difficulties, firms will provide a range of support – including formal forbearance – in accordance with the FCA Handbook.
  • The ban on repossessions will continue until October 31, 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.

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James Batchelor's avatar

James – or Batch as he’s known – started at Car Dealer in 2010, first as the work experience boy, eventually becoming editor in 2013. He worked for Auto Express as editor-at-large and was the face of Carbuyer’s YouTube reviews. In 2020, he went freelance and now writes for a number of national titles and contributes regularly to Car Dealer.

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