The Financial Conduct Authority (FCA) has told firms to extend payment freezes due to end this month until 31st October meaning customers unable to keep up with high-cost credit payments amid the coronavirus crisis do not have to pay anything until November.
Firms must offer payment deferrals or reduce payments, with people yet to request a payment holiday. The extension covers all aspects of high-cost short term credit including motor finance and rent-to own (RTO), buy-now pay-later (BNPL), schemes and pawnbrokers.
The measures include:
When implementing this guidance, firms should be particularly aware of the needs of their vulnerable customers and should consider how they engage with them. Firms 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.
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.”
The guidance comes into force on 17th July 2020.
Commenting on the announcement Adrian Dally, Head of Motor Finance at the FLA said “We welcome the fact that the FCA has given greater prominence and emphasis to the message that those customers who can resume full or partial payments should do so.”
“This is particularly important to prevent customers accruing unsustainable levels of debt, but also to allow further support to be given to those most in need.”
Nick Hill, Money Expert at the Money and Pensions Service said “The extension of support measures confirmed today, including for motor finance and high-cost credit customers, could be helpful for people who are experiencing temporary payment difficulties, as we know that Covid-19 is continuing to affect people’s finances. It’s really important that people speak to firms to find out what options are available and appropriate for them, and consider what this will mean for their repayments in the long term.”