Further help confirmed for car finance consumers still facing coronavirus difficulties
The Financial Conduct Authority (FCA) has confirmed support will continue for motor finance consumers facing payment difficulties due to coronavirus (Covid-19), including a ban on repossessions until 31 October 2020. But it has also suggested that if you can afford to make repayments on your car lease, it’s in your best interests to do so.
Commenting on the guidance, which comes into force today (17 July), 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 support 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, firms will provide them with support by freezing or reducing payments to a level they can afford, on their motor finance, for a further three months.
- Customers that have not yet had a payment freeze or requested an extension of an existing payment freeze can request this up until 31 October 2020.
- The ban on repossessions will continue until 31 October 2020 – this applies to motor finance 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.
The FCA says, when implementing this guidance, firms should be particularly aware of the needs of their vulnerable customers and should consider how they engage with them. 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.
Commenting on the FCA’s statement, Adrian Dally, head of motor finance at the Finance and Leasing Association, 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.”
The guidance will only apply to consumer agreements and not business agreements. If you are a business owner or employer, you can find out what financial support you can get for your business here.