Context
The FCA has updated its guidance on payment deferrals and tailored support, designed to provide enhanced support to consumer credit customers who face payment difficulties as a result of coronavirus (Covid-19), following the feedback received on draft proposals published on 4th November 2020.
The guidance comes into effect on 25th November 2020, however the FCA is encouraging those firms which can start providing this enhanced support sooner, to do so.
Key points to note
The feedback statement (FS20/18) which can be viewed in full here: https://www.fca.org.uk/publication/feedback/fs20-18.pdf summarises the feedback received on the proposed measures and the FCA response to that feedback.
- The Payment Deferral Guidance and Tailored Support Guidance set out the FCA expectations on firms to ensure that:
- They continue to provide payment deferrals to consumers who have not yet had a payment deferral, and that those who have had less than 6 months of payment deferrals will be able to top up, as long as total deferrals do not exceed 6 months (with the exception of High-Cost Short-Term Credit which will remain 1 month);
- They continue to provide tailored support to consumers facing financial difficulty as a result of coronavirus who have benefitted from payment deferrals under the Payment Deferral Guidance and who remain in financial difficulty, as well as those who are affected by coronavirus after 31 March 2021;
- No one should have their vehicle or goods repossessed without their agreement until after 31 January 2021.
- In line with the FCA’s general approach in its response to Covid-19, swift action to provide protection for consumers in these difficult times and provide clarity for firms was the primary goal behind the updated guidance. As such the FCA did not formally consult on the proposals or produce a cost benefit analysis as it believed that doing so would have caused a delay which would have been prejudicial to the interests of consumers.
- Firms were invited to comment on the proposals and the FCA received 26 responses from consumer organisations, firms, trade bodies and individuals.
- Due to the ongoing situation and the circumstances arising from the impact of coronavirus, the FCA intends to continue to review, update or amend guidance or provide new guidance as necessary.
Next actions
Firms should ensure that they have read and understand their obligations under the updated guidance and have implemented any changes in advance of the guidance coming into effect on 25th November 2020.