The FCA has confirmed measures to ensure that firms provide tailored support for users of certain consumer credit and overdraft products, including motor finance, who continue to face payment difficulties due to coronavirus (Covid-19).
Following a short period for comments, FCA has finalised the additional guidance setting out how firms should provide ‘tailored support’ to consumer credit borrowers who have been granted payment deferrals under the current guidance and who continue to face financial difficulties, as well as those who experience payment difficulties as a result of circumstances relating to coronavirus after 31 October.
The guidance comes into force on 2 October and will cover motor finance customers.
The FCA expects firms to:
- Recognise the uncertainties and challenges that many customers will face in the coming months as the crisis develops, and provide tailored support which reflects their individual circumstances.
- Work with customers approaching the end of a payment deferral to provide support before they miss payments.
- Be flexible and employ a full range of shorter and longer-term options to support their customers and minimise stress and anxiety experienced by customers in financial difficulty.
- Give customers time and opportunity to repay and do not pressurise them into repaying their debt within an unreasonably short period of time.
- Put in place sustainable repayment arrangements which are affordable and take account of their customers’ wider financial situation including their other debts and essential living expenses.
- Prevent customers’ balances from escalating once they have put in place a repayment arrangement by suspending, reducing, waiving or cancelling any interest, fees or charges necessary to make that happen.
- Recognise and respond to the needs of vulnerable customers.
The FCA will monitor how firms apply the guidance to ensure borrowers are treated fairly, with regard to their individual circumstances.
The current guidance published in July will continue to ensure temporary support for those impacted by coronavirus until 31 October 2020. The additional guidance published this week ensures consumers will still be able to obtain the support they need from their lenders after 31 October.
The guidance will be kept under review and the FCA will also review it within six months of it coming into effect to determine whether it remains relevant given the coronavirus crisis or whether it needs to be amended, withdrawn or replaced.
Please access the finalised, additional guidance here