In November 2020, FCA published guidance which meant firms should generally not enforce repossessions before 31 January 2021. Following the period for comment on the draft guidance published on 13 January, FCA has now published finalised guidance.
For consumer credit, FCA has updated the guidance so that firms will be able to repossess goods and vehicles from 31 January 2021. The final guidance emphasises that this should “only be as a last resort, and subject to complying with relevant government public health guidelines and regulations, for example on social distancing and shielding”. “Importantly, firms will also need to consider the potential wider impact on vulnerable customers, including because of the pandemic, when deciding whether repossession of goods or vehicles is appropriate”, FCA added.
Support available for consumers
Support continues to be available for consumers who are experiencing financial difficulties because of coronavirus. This could mean taking a payment holiday or receiving tailored support.
Consumers have until 31 March 2021 to apply for a payment holiday for: mortgages, personal loans, credit cards, store cards and catalogue credit, motor finance, including hire-purchase and leasing agreements, rent-to-own, buy now pay later, pawnbroking agreements and high-cost short-term credit.
This is time agreed with the lender when consumers make no or reduced payments. Consumers can request a payment holiday of up to 6 months in total, but lenders can only agree a payment holiday of up to 3 months at a time. For high-cost short-term credit, borrowers can apply for a 1 month payment holiday. If the application is made by 31 March, borrowers may be able to extend up to 31 July when all payment holidays will come to an end.
Referring to consumers, FCA highlighted: “If you can afford to restart repayments you should, as it will cost less in the long term”, FCA highlighted.
“If you are coming to the end of your payment holiday, and you are still experiencing difficulties in keeping up with your repayments, your lender should provide tailored support. This is support appropriate to your individual circumstances”, FCA added.
Keeping pace with contactless payments
Since the limit for contactless card payments was raised to £45 last April at the start of the pandemic, people are increasingly making use of contactless payments. Recognising changing behaviour in how people pay, as part of a wider consultation, FCA will shortly be seeking views on amending our rules to allow for a possible increase in the contactless limit to £100.
View the full update online here