Motor Finance firms are expected to be asked by the Financial Conduct Authority (FCA) to extend the support they offer customers who may be struggling financially as a result of the coronavirus pandemic.
Customers can currently request a three-month pay freeze and the FCA is encouraging finance firms to extend the payment freeze until October 31st, 2020. Whilst customers who can afford to start making regular payments are encouraged to do so, the FCA wants firms to contact customers who are already using the payment freeze option to see if they would benefit from extending.
The FCA is keen for the current ban on vehicle repossession to also be extended to October. The support currently available to car finance customers includes freezing or drastically reducing payments and offering customers on a ‘buy now pay later’ deal the chance to extend their promotional period.
The extension of the support scheme will also enable customers who haven’t yet needed to take advantage of it to do so. Banks and lenders are aware that it’s likely more people will still be impacted financially from coronavirus over the coming months and an extension would allow customers to request a payment freeze up until October 31st, potentially offering them support through to early 2021.
The FCA is keen for lenders to engage with their most vulnerable customers to help them better understand the type of help and support that is on offer to them and how they can access the resources.
Whilst the FCA have been urged to consider the fortunes of non-bank lenders who have been hit hard by the pandemic, they reiterated that the guidance to extend the support applies in the most exceptional of circumstances and is in place purely for those customers whose financial situation has taken a hit as a result of coronavirus.
The FCA produced draft guidance for the motor finance industry in April and this is the latest step in its support for consumer credit customers who have been impacted by the pandemic.
Due to the pandemic the FCA has also delayed the implementation of a set of new rules that were due to come into play this month. The new rules were specific to motor finance and demanded explicit commission disclosure and the banning of ‘difference-in-charges’ models for brokers.