Written by Ebony Ezekwesili
In light of the recent government restrictions in response to COVID-19, the FCA published a statement on 2 November 2020 announcing its plans to update its temporary guidance on personal loans, motor finance, credit cards, buy-now pay-later, rent to own, high-cost short-term credit (HCSTC) and pawn-broking, to support consumer credit customers financially affected by the pandemic.
The FCA’s previous temporary guidance was released in July 2020 and expires on 31 October 2020. However, the FCA has stated it is happy for firms to continue to act in accordance with the July guidance beyond 31 October 2020, until such time when it publishes further guidance. The FCA has also reminded firms of the September additional guidance, in its updated COVID-19 webpage.
Under the updated guidance, the FCA proposes that consumer credit customers who have not yet had a payment deferral under its July guidance can request one, which can last for up to six months, unless it is obviously not in the customer's interests. The FCA also states that borrowers who are currently benefitting from a first payment deferral under the July guidance would be able to apply for a second deferral. Consumers of HCSTC (such as payday loans) would be able to apply for a payment deferral of one month if they have not already had one.
The FCA will work with a number of stakeholders such as trade bodies and lenders on how to implement the proposals as quickly as possible. Consumer credit customers who have already benefitted from payment deferrals and are still experiencing payment difficulties should speak to their lender to agree tailored support. The FCA also emphasised the need for borrowers who can afford to make repayments to continue to do so.