The Financial Conduct Authority (FCA) has announced plans to support consumers who are facing difficulties paying their car finance agreements during the coronavirus crisis.
Customers who are struggling to meet their car payments as a result of reduced income because of the coronavirus crisis should receive a three-month payment freeze from finance companies, who should also not take any steps to end the agreement or repossess the vehicle for unmet payments.
Christopher Woolard, interim chief executive at the FCA, said, ‘We are very aware of the continued struggle people are facing as a result of the pandemic. These measures build on the interventions we announced last week, and will provide much needed relief to consumers during these difficult times.
“We have tailored our measures to specific products. For most of these proposals, firms and consumers should consider the amount of interest which may build up, and balance this against the need for immediate temporary support. If a payment freeze isn’t in the customer’s interests, firms should offer an alternative solution, potentially including the waiving of interest and charges or rescheduling the term of the loan.’
The FCA has also suggested that finance companies should not make any amendments to the existing contracts. Also, if a customer would like to keep their vehicle at the end of a PCP agreement but doesn’t have the funds to cover the balloon payment, they should work together to find a fair appropriate solution.
Not only do the proposals aim to support car consumers who are struggling with their car finance agreements, but they also include high-cost, short-term credit agreements like payday loans and other credit products.
The proposals are set to be finalised by this Friday (April 24), and will come into force shortly afterwards.