The Financial Conduct Authority is adding car finance to the temporary relief measures aimed at supporting households facing sudden financial hardship as result of the coronavirus epidemic.
The FCA’s move means banks must offer payment freezes to all customers that request one. As expected, the FCA also confirmed proposals set out last week requiring banks to offer three-month payment freezes on loans and credit card debt.
“We know there is still more work to be done, and we will be announcing further measures to support consumers in other parts of the credit market in the future, including in the motor finance sector next week,” FCA Interim Chief Executive Christopher Woolard said in a statement.
“Customers should think carefully before making use of these measures and only do so if they need immediate help. Where they can still afford to make payments, they should continue to do so,” Woolard said.
UK Finance, which represents banks that will apply the measures, urged consumers to use online chat, social media and mobile and banking apps where possible to obtain information about the relief.
“If customers do need to speak to their lender, we ask customers to be considerate of those most in need of immediate relief to ensure phone lines are available for this group,” UK Finance said.
In response to the consultation, the FCA clarified that guarantor loans, logbook loans, home collected credit, a loan issued by Community Development Finance Institution, and some loans issued by regulated credit unions also come under the temporary relief measures.
The measures will allow customers hit by coronavirus and who already have an arranged overdraft on their main personal current account, to have up to £500 charged at zero interest for three months.
The FCA said that consumers using any of the temporary payment freezes will not have their personal credit rating affected.