Payment freeze for car finance and high cost credit products extended
The Financial Conduct Authority (FCA) has confirmed that motor finance customers, those paying for high-cost credit products such as buy-now pay-later (BNPL), rent-to-own (RTO) and pawnbroking customers can receive a payment freeze until October this year if they are facing payment difficulties due to COVID-19.
The FCA has told firms that at the end of the first payment freeze, they should contact their customers to find out if they can resume payments - and if so, agree a plan on how the missed payments could be repaid. If customers can afford to return to making regular repayments it is in their best interest to do so.
The FCA has said that for BNPL customers in receipt of a loan given within a promotional period, customers struggling to repay the loan should be offered an extension.
It added that for pawnbroking agreements, where the loan is within the redemption period, firms should extend that period for three months or agreeing not to sell or suspending the sale of an item for three months if the redemption period has already finished.
The FCA has also said that high-cost short-term credit (HCSTC) customers who have had a payment freeze and are still experiencing payment difficulties, should receive a range of support - including formal forbearance for firms.
A ban on repossessions has also been extended until October 31 2020.
Christopher Woolard, interim chief executive at the FCA, said: “It is vital that people facing temporary payment difficulties because of the impact of coronavirus get the assistance they need. For those who have already taken a payment freeze and can afford to start making payments, even partially, it is in their best interest to do so, but for those that need help it will be there.”
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