FCA confirms high cost credit support

The FCA has confirmed the support that will be available for high cost credit customers who continue to face payment difficulties due to coronavirus.

The regulator’s measures are aimed at users of buy-now pay-later (BNPL), rent-to-own (RTO), pawnbroking and high-cost short-term credit (HCSTC) products, as well as motor finance customers. The guidance is due to come into force on 17 July 2020.

If customers can afford to return to regular repayment, or make partial payments, the FCA has stated it is in their best interest to do so. The regulator has also urged that firms should contact customers coming to the end of a first payment freeze to find out if they can resume payments – and if so, agree a plan on how the missed payments could be repaid.

Customers that have not yet had a payment freeze or requested an extension of an existing payment freeze can request one up until 31 October 2020.

For BNPL customers, where a loan is within the promotional period, this will mean offering customers an additional extension to that period.

For pawnbroking agreements, where a loan is within the redemption period, the measures will mean firms offering a further extension to the redemption period. If the redemption period has already ended, this will mean agreeing not to sell the item during the payment deferral period.

The regulator also added that HCSTC customers can only apply for a payment freeze just once up to 31 October, in respect of each HCSTC agreement.

FCA interim chief executive, Christopher Woolard, commented: “Our measures will ensure that people who are still facing temporary payment difficulties because of this pandemic, continue to have access to the help they need. However, if you can afford to start making repayments, you should.”

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