On 19 November 2020, the FCA confirmed updated guidance to firms setting out enhanced support that should be available to consumer credit customers experiencing payment difficulties as a result of the COVID-19 pandemic. The guidance covers users of personal loans, credit cards, store cards, catalogue credit, rent to own, buy now pay later, pawn broking, motor finance and high-cost short-term credit.
In summary, the updated guidance provides that:
- Those who have not yet had a payment deferral will be eligible to apply for payment deferrals of up to 6 months in total.
- Those who currently have a payment deferral will be eligible to apply for a further deferral, as long as the total length of deferrals doesn’t exceed a maximum of 6 months in total.
- Those who have previously had a payment deferral of less than 6 months will also be eligible to apply for a further payment deferral, as long as the deferrals don’t exceed 6 months in total.
- A firm may assess that a payment deferral is obviously not in a customer’s interest. In such cases, the firm should instead provide tailored support appropriate to the customer’s circumstances.
- Consumers who have already had 6 months of payment deferrals or who are in arrears or receiving tailored support, will not be eligible for a further payment deferral. Instead, firms will provide tailored support appropriate to their circumstances. This may include the option to defer further payments.
- High-cost short-term credit consumers, such as those with payday loans, will be eligible for a payment deferral of 1 month.
Consumers will have until 31 March 2021 to apply for an initial or a further payment deferral. After that date, they will be able to extend existing deferrals to 31 July 2021, provided these extensions cover consecutive payments, and subject to the maximum 6 months allowed. If borrowers who have not yet taken a deferral think they need the full 6 months, they should apply in good time before their February 2021 payment (to cover a full six months of payments, from February to July inclusive).