If the proposals are approved, firms would need to give a three-month payment freeze to customers struggling to meet finance or leasing payments on their motor finance deals due to coronavirus, and wouldn’t be able to repossess their vehicles.
Customers with rent-to-own, buy-now-pay-later or pawnbroking agreements would be given the same three-month freeze, though interest would continue to rack up during the payment freeze. Meanwhile payday loan customers would get a shorter one-month interest-free payment freeze to reflect the shorter period of most of these loans.
The Financial Conduct Authority (FCA) is now holding a rapid consultation on these proposals until Monday 20 April and says it expects to finalise them by Friday 24 April – with the rules coming into force “shortly afterwards”.
The proposals follow new requirements for banks to offer payment holidays on loans and credit cards, as well as interest free overdrafts, which were approved last week.