THE Financial Conduct Authority will next week announce measures to support consumers in the motor finance sector.
It has already confirmed a package of targeted temporary measures to help people with some of the most commonly used consumer credit products.
The proposals will give firms the flexibility under FCA rules to provide temporary financial relief to those facing payment difficulties during the coronavirus (Covid-19) pandemic.
Christopher Woolard, interim Chief Executive at the FCA, said: “We know many people are suffering financial pressures brought on as a result of the coronavirus pandemic. The measures we’ve announced are designed to provide people affected with short-term financial support through what could be a very difficult time.
“The changes will provide support for consumers with credit cards, loans and overdrafts, facing temporary financial difficulties because of the pandemic.
“Customers should think carefully before making use of these measures and only do so if they need immediate help. Where they can still afford to make payments, they should continue to do so.
“We know there is still more work to be done, and we will be announcing further measures to support consumers in other parts of the credit market in the future, including in the motor finance sector next week.”
Measures announced this week include firms being expected to:
- offer a temporary payment freeze on loans and credit cards for up to three months, for consumers negatively impacted by coronavirus.
- allow customers who are negatively impacted by coronavirus and who already have an arranged overdraft on their main personal current account, up to £500 charged at zero interest for three months.
- make sure that all overdraft customers are no worse off on price when compared to the prices they were charged before the recent overdraft pricing changes came into force.
- ensure consumers using any of these temporary payment freeze measures will not have their credit file affected.
Rule changes are already in force covering guarantor loans, logbook loans, home collected credit, a loan issued by Community Development Finance Institution and some loans issued by credit unions, but only where these are regulated. The guidance also applies to firms which have acquired such loans.
The FCA said it will keep guidance under review.
