The new draft motor finance guidance has been issued and the FCA are seeking views from the industry by close today (6/7/20). The guidance now introduces the concept of a partial payment deferral and makes it clear that additional payments deferrals are not a customer right but rather it is for the lender to assess what is appropriate. I hope the press do not present this new guidance as providing consumers with a further deferral as a primary option. This isn't the case. Further, I hope the FCA clarifies its intentions regarding repossessions. In many cases repossession will remain the best option for a customer who is in payment difficulties, to avoid depreciation and increased debt burden. Lenders can proceed where a customer isn't in "temporary" payment difficulties as a result of the virus and doesn't need the car, however, there will be confusion regarding what "temporary" means and I fear the messaging to the public will cause confusion.
The FCA, which brought in the initial protections in late April, said lending firms should contact their customers at the end of a first payment freeze to find out if they can resume payments. It pointed out that if customers can afford to return to making regular repayments it is in their best interest to do so. If customers can afford to restart repayments, lenders should agree a plan on how the missed payments could be repaid.
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